Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Bull) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Battery Strategy (Science and Technology Committee Report)
(2 years ago)
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Lord Patel
That the Grand Committee takes note of the Report from the Science and Technology Committee Battery strategy goes flat: Net-zero target at risk (1st Report, Session 2021-22, HL Paper 53).
Lord Patel (CB)
My Lords, it is a pleasure to open this important debate on the Science and Technology Committee’s report, entitled Battery Strategy Goes Flat. Before I do so, I thank all those who gave evidence to the committee: our committee staff; the committee clerk, Dr Simon Cran-McGreehin; our analyst, Dr Amy Creese; Ellie Hassan, a POST fellow and the committee constant, without whom chaos would prevail; and Cerise Burnett-Stuart, the committee operations officer. I most sincerely thank them all.
My particular thanks go to our specialist adviser, Professor Clare Grey FRS—who has recently become Dame Clare Grey DBE FRS, and who I am pleased to say is listening to us—and Geoffrey Moorhouse Gibson, professor of chemistry at the University of Cambridge. Their advice, knowledge and expertise guided the committee. Last but not least, I thank all the committee members for their help and hard work; they were never controversial, and they never challenged me, at least.
I regret that, due to previous commitments, our current chair, my noble friend Lady Brown, is unable to take part today. I am grateful to the Minister for taking time to reply to the debate today; I have no doubt that he will do so in his much-appreciated customary manner of answering the questions raised by those speaking and not just sticking to the brief provided. I most sincerely thank all noble Lords, not just the members of the committee, for making time to take part in today’s debate.
The title of our report is Battery Strategy Goes Flat: Net-Zero Target at Risk, and it was published on 27 July 2021. At the time, it seemed a provocative title, but subsequent events and the recent news seem to have confirmed our scepticism. The report—which has four key chapters covering the applications of batteries and fuel cells, technological developments and, importantly, strategic issues facing the UK for decarbonising the transport system—makes several conclusions and suggests government action to make the UK a leader in batteries and fuel cells. The Government’s response, while not disagreeing with the conclusions or details in the report, was not convincing as a clear delivery plan. Most of the responses to our ask for government action used the phrase, “The Government are committed to”, but provided few details as to implementation. I hope that the Minister, in responding, can put that right today.
At the time of the report’s publication, the committee felt that the UK policy of battery manufacture was insufficient to meet the future needs of the automotive industry as it transits to the government policy of full electrification of cars and smaller commercial vehicles by 2030. The requirement of seven to eight gigafactories by 2030, as suggested by our witnesses, is not likely to be met; in turn, our net-zero commitments will not be met either. The committee felt that the pace and scale of the building of gigafactories in the UK will not meet the demands for batteries by the automotive industry, and the UK would risk losing much of its automotive industry to overseas. In our evidence sessions, many witnesses felt that the UK faced serious challenges from our competitors, and that we were behind them not only in the manufacture of batteries but in innovations, supply chains and skills.
I recognise that the UK now has a critical minerals strategy to fill the gap in supply chains—a positive step—but no clear implementation plan, without which the UK will again miss out to competition for securing much sought-after minerals.
We were astonished by the stark disconnect between the optimism of Ministers and officials and the evidence from our many witnesses that the UK will be unable to maintain its automotive industry. The two immediate deadlines, of 2027, when the rules of origin agreement will require batteries and 55% of components to be manufactured in the UK or the EU, and 2030, when production of all petrol and diesel cars and vans will cease, are unlikely to be met. Without scaling up the domestic manufacture of batteries and urgently focusing on improving the supply chain of materials, the UK will end up importing batteries and vehicles.
A recent report in the media summarised well the current state of battery manufacturing in the UK and the future of the automotive industry. Recent events have put an end to the UK’s ambition to be a global hub of the electrified automotive industry. BMW has announced the end of production of its electric Mini in Cowley, which it is moving to China. Johnson Matthey, a leader in the development of battery technology in Britain, has quit the sector, citing competition from China and South Korea as a reason. Arrival, once a promising enterprise for the manufacture of electric vans and buses in the UK, is rumoured to be moving to the USA.
When it comes to battery manufacture, Britishvolt, once highly trumpeted as the UK’s big gigafactory, is now reported to be in serious difficulty and is possibly facing insolvency. Another such enterprise at Coventry airport has hardly got off the ground. This leaves the UK with one gigafactory, so it seems we have lost out on the international race to manufacture lithium-ion batteries.
The UK still needs the capacity to supply its domestic market, so I ask the Minister: what plans do the Government have to attract investment in building gigafactories for the production of batteries in the UK? How many will there be, and what is the timescale for when such facilities will be up and running? Does he think the UK can still meet its commitment to phase out petrol and diesel cars by 2030?
Although we may have lost the race to be the global hub of lithium-ion batteries, the UK could be a leader in the development of the next generation of batteries, such as solid-state, lithium-sulphur and sodium-ion technologies. To exploit the competitive advantage that we currently hold, the Government need to show strong support for both research and manufacturing. As yet, there is no sign of the Government doing so. I ask the Minister: do the Government intend to provide a UK strategy for the manufacture of the next generation of electric batteries in the UK, and to increase support for the research and development of such technologies?
We need to grow our innovators, yet this is also threatened. For example, the Faraday Institution, which received flat funding until 2025, will not be able to recruit PhD students in 2023, as funding cannot be guaranteed beyond 2025. How are we to grow the next generation of innovators if we cannot recruit them because of lack of funding?
The Government can still meet their ambition to be a global hub of battery production by demonstrating a strong commitment to the research and manufacture of the next generation of batteries, and not risk losing our automotive industry.
I shall now move on. Our report also reported on the production of hydrogen. Soon after the publication of our report, which asked for a clear policy on hydrogen and fuel cells, the Government published their hydrogen strategy in August 2021. It stated the Government’s ambition to deliver blue hydrogen generation capacity of 5 gigawatts by 2030 and the first 1 gigawatt by 2024. More recently, the Government have increased this by committing to increase the capacity of hydrogen generation to 10 gigawatts by 2030. Will the Minister say how and where this is to be achieved, and in what timescale?
The UK’s current capacity for hydrogen production is way short of the Government’s ambition. None of the strategy refers to the development and production of fuel cells, a technology where UK excels, with several UK companies operating overseas but not in the UK.
There is a lack of clarity about the Government’s plans for the use of hydrogen for light and heavy goods vehicles, the development of infrastructure for the supply of hydrogen, and the use of hydrogen and fuel cells for domestic heating, and in the not too distant future there will be a need for a joined-up strategy on the use of hydrogen, ammonia and aviation fuels. When will the Government make these decisions and will there be a paper describing them?
The Government also need to address public concerns about the safety of batteries and hydrogen fuel cells and the regulatory changes needed to address this. What plans do the Government have to address these issues?
I have no doubt that other noble Lords will speak to many other issues that our report identified, including the need to expand vehicle charging points, address the skills gap and increase research funding for batteries and fuel cells.
If the Government are to deliver on their net-zero commitments, these issues need urgent attention. I will be surprised if someone does not ask about the implications of net-zero policies, given the current energy crisis and rising costs. The view of the committee was clear about the role that batteries and hydrogen fuel cells can play in delivering net-zero policies. The evidence presented to us was also clear that the Government need to do much more. All the evidence suggests that the Government have big ambitions and are doing something, but not enough. We need more action and commitment from government to give confidence to industry, investors and our research community. The Government’s ambition needs to be matched by their action. I beg to move.
Lord Lilley (Con)
My Lords, I congratulate the noble Lord, Lord Patel, and his committee on producing a powerful report, which I hope will send an electric shock through the Government and the industry about the need for urgency if we are to move in the direction that they wish and have a sustainable automotive industry in this country with the necessary battery production.
I want to focus on a precondition of that, which is that we have access to sufficient reserves and resources of minerals to produce the batteries if we have the capacity to do so. I draw attention to two documents which highlight this very powerfully. The first is The Role of Critical Minerals in Clean Energy Transitions, produced by the International Energy Authority about a year ago, which paints a fairly disturbing picture of potential shortages of these minerals. It states:
“EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.”
It predicts that lithium demand will grow 40-fold by 2040, even in the IEA’s more moderate sustainable development scenario. That is followed by graphite, where demand will go up 25-fold, cobalt which will go up 21-fold, nickel which will go up 19-fold and rare earths which will go up sevenfold. In less than two years since January 2021, the price of lithium carbonate has risen more than 13-fold, so the shortage is already demonstrating itself.
The IEA states that the expected supply from existing mines and projects under construction is estimated to meet only half of projected world demand for lithium and cobalt by 2030, and its analysis suggests that on average it takes 16 years from the start of a mining project through to first production, so the scope for ramping up production is much less than one might hope—or so it would appear.
The other source I refer to is a report produced for the Finnish geology institute by Professor Michaux. Those of your Lordships who got up at 6.30 am on Friday to listen to his presentation—750 people did, I am told, although I was too late and had to see it on playback—would have been struck by the analysis that he has produced: to make one battery for each vehicle in the global transport fleet, once we transition to electric vehicles, will require 48% of total global nickel reserves and 44% of total global lithium reserves. He concludes, to cut a long story short, that the whole EV battery solution may need to be rethought and a new solution developed that is not so mineral-intensive.
I hope that he is too pessimistic; I am an optimist where resources are concerned. I recall that famous wager between Julian Simon and Paul Ehrlich, in the wake of the Club of Rome and Paul Ehrlich’s book The Population Bomb, in which he forecast that there would be shortages of everything. Julian Simon took him on and said, “Choose a portfolio of minerals or other resources and a period of your own choosing, and I bet you that the price will come down and not go up”. Ehrlich chose five minerals and a period of 10 years. Ten years later, the average of those prices had fallen: three had fallen in absolute terms and all had fallen in real terms.
So the market is quite good at responding to shortages and can develop things, but doing so will be a huge problem if the world is going to move as fast as it is planning—and hoping—to move in the development of electric vehicles in particular and other uses of batteries that are associated with the move to net zero by 2050. I hope that the committee’s recommendations will be followed with greater urgency than the Government and industry seem to have shown so far. I hope too that we will pay attention to the need to develop the sources of minerals and raw materials that will be necessary to make it a reality.
Viscount Hanworth (Lab)
In one sense, there is very little that needs to be said about the conclusions of the report of the Science and Technology Committee regarding the future of the industries in the UK that are pursuing the technologies of batteries and fuel cells. The report declares in its title that the strategy to support these industries has gone flat. The effort to support the emerging technologies has barely got off the ground, and the forewarning contained in the report has since been realised.
During the writing of the report, it was learned that Johnson Matthey has abandoned its project to supply materials to the emerging UK industry aimed at providing the lithium-ion batteries to power the next generation of UK manufactured vehicles. The firm was well established by middle of the 19th century as a dealer in bullion and rare metals. More recently, it has wished to be in the forefront as a provider of the special metals, including lithium, nickel and cobalt, that are essential to the industry. The chief executive of Johnson Matthey stated that the decision to exit the battery materials business was due to
“insufficient returns, increased commoditisation of battery materials”
and
“the need for very high capital investments to remain competitive.”
In fact, the company was short of the funds that needed to be invested in what is liable to become a highly profitable enterprise.
The sale of the assets of Johnson Matthey was mainly to EVM, which is a large European consortium. The sale included the battery technology centre in Oxford and the battery technology centre and pilot plant in Billingham. The assets relinquished also included a research centre in Moosburg, Germany, and a partly constructed site in Konin, Poland. The company’s lithium-ion phosphate battery facility in Canada was acquired by Nano One, which is a large North American consortium and technology innovator in battery materials.
Recently, we have learned that BMW, which owns the production facilities of the UK Mini, has decided to relocate the production of the electric Mini to China. We have also heard that one of the much-vaunted UK gigafactories intended to produce the car batteries—Britishvolt—has gone into receivership. The combination of these announcements is devastating. As regards the decision of BMW to relocate to China, we can assume that the firm has made its decision in view of a clear-sighted negative appraisal of the prospect of there being an adequate supply of automotive lithium-ion batteries sufficiently close at hand to justify its continued presence in the UK as a manufacturer of electric vehicles.
It has become evident that car manufacturers require their supply chain for batteries to be close at hand. One obvious reason for this is the cost of moving such heavy items from a remote manufacturer to the assembly lines of the cars. A more cogent reason is the likelihood that a heightened demand for batteries in future will be met with a dearth of supply. In such circumstances, a car manufacturer needs to be in a position to pre-empt the necessary supply. To do so, it must be located close to the source.
What would have convinced the departing car manufacturer that it should remain in the UK? Surely it is none other than confidence that support for the developing manufacturing infrastructure will be forth- coming from the Government. This is where the attitude of the UK Government has been most discouraging. The Conservative Government are wedded to the idea that free enterprise flourishes best when there is minimal intervention from the Government. Under Margaret Thatcher in the 1980s, the Government divested the state of its nationalised industries. These had been a legacy of the Second World War and the immediate post-war years, when the Labour Government had begun to take control of the commanding heights of the economy.
An assurance that private industry could be relied on to invest sufficiently in the basic infrastructure of the economy seems to have been provided by the experience of the privatisation of the electricity supply industry. Cheap combined-cycle gas turbine plants, powered by plentiful North Sea gas, began rapidly to replace the ageing coal-fired power stations of the erstwhile nationalised industry. The illusion was created that it is sufficient for the Government to undertake to supplement marginally the capital funds that private industry can raise from the financial markets. This is how the Government have proposed to support the building of factories to manufacture automotive batteries.
The support that the Government have offered Britishvolt is paltry. In January, they pledged a mere £100 million in support as a means of attracting investors. This is a small sum in comparison with the £1.7 billion that is reported to have been raised from private investors. The future of the enterprise was thrown into doubt over fears that it could run out of money, when the Government rejected a request for £30 million in advance funding. The matter is still unresolved, and the episode will serve as a future deterrent to investors in projects that require the support of the Government.
The Department for Business, Energy and Industrial Strategy continues to say that the Government are
“determined to ensure the UK remains one of the best locations in the world for automotive manufacturing as we transition to electric vehicles, while ensuring taxpayer money is used responsibly and provides best-value”.
This kind of boosterism is seen to be pure fantasy when one looks at the commitments of other countries to the future of battery technology. China has 20 battery gigafactories that are either operating or under construction, which have been sponsored by the state. Britain currently has only one sizeable factory that manufactures automotive batteries, which is a plant in Sunderland that is tied to the Nissan car factory. Nissan had planned to leave the UK in consequence of Brexit but, presumably, the tie to its battery producer was too strong to allow this to happen. Pathologies such as those affecting the automotive industry are pervading the British economy, and the fault lies largely with the incumbent Government.
Modern battery technology is closely allied to fuel cell technology. Fuel cells are proposed as a means of propulsion for the freight vehicles that are to replace the large diesel-powered juggernauts that pound our roads. They are also proposed for powering trains and ships. Fuel cells have received even less support from the Government than batteries.
Fuel cells are powered by hydrogen fuel, which is created, nowadays, mainly via the steam reformation of methane. This is an energy-intensive process that releases carbon dioxide. It needs to be replaced by a process of high-temperature electrolysis that splits the hydrogen molecules from the oxygen atoms with which they are combined in water.
The appropriate means of supplying the electricity and the heat for the process of high-temperature electrolysis is a small nuclear plant, dedicated to the task. However, Britain’s project to build small modular reactors, which has been undertaken by Rolls-Royce, has been subject to endless hesitation and delay as a consequence of the failure of the Government to provide adequate funding for the period of development, and the project remains in peril.
Our economic prospects are already dire, at least for the short and the medium term. Unless we can effect an industrial recovery, which would need to be sponsored by the Government, our long-term prospect is of an impoverished country that will be largely dependent on imported foreign technology. The majority of our capital assets, whether industrial or otherwise, will have fallen into the hands of foreign owners, through a process mediated by the financial sector, which will be the only remaining profitable enterprise.
Baroness Sheehan (LD)
My Lords, I start by commending the noble Lord, Lord Patel, for his skill in chairing the committee that put together this report. I am proud to say that I am a member of that committee. I also congratulate him on the way in which he introduced the debate, which leaves me with very little to say except that I agree with the remarks that he has already made.
It is a shame that it has taken over a year since the report was published for it to come before your Lordships’ House for debate. Batteries powered by zero-emission energy sources are on the front line of our battle against climate catastrophe, and this report concludes that the Government need to do much more to secure Britain’s place in the forefront of the battery revolution.
The bans on the sale of new petrol and diesel cars and vans by 2030, hybrids by 2035 and heavy goods vehicles by 2040 were welcome announcements, given that emissions from the transport sector make up about one-fifth of all greenhouse gas emissions in the UK, and had shown themselves to be resistant to efforts to bring them down. However, ambition without action is pure hubris and doomed to failure. The committee’s conclusion that it could not identify a government plan for the rapid action needed to achieve the Government’s stated aims has not been disproven with the passage of time.
Since the report was published, there has been a revolution in the car industry. Changes have been hastened by the unpredictable events of Russia’s invasion of Ukraine and the ensuing chaos in the production and cost of fuel. The sales of new EVs in the UK have increased enormously. In the half-year to June 2022, pure-battery electric vehicles enjoyed the biggest growth in any fuel type, with 56% more registrations—and that was in the context of an overall market that shrank by nearly 12%. Furthermore, despite the worldwide semi- conductor shortage and Covid lockdowns in China, global sales of EVs rose 61% in quarter 2 of this year.
Our car manufacturers are first class, but the sharp increase in sales of EVs is steeper than predicted. Can they meet the numerous challenges? For example, we will need a secure supply of critical resource materials— the noble Lord, Lord Lilley, spoke at length about those—chief among them lithium and cobalt. So the Government’s publication, finally, of the 2022 critical minerals strategy is welcome. Some might say it is too little, too late, but it is here now. However, it lacks any statement of where we might find some resilience in the supply of these critical minerals. These supply chains are always risky and fragile and are currently disrupted due to the war in Ukraine, Brexit, Covid-19, and other conflicts in producer regions. So the Government miss a trick when they fail, yet again, to address demand reduction to increase resilience.
According to research by Greener UK—and I thank it for its briefing—reducing demand for electricity in our homes by heat pumps, and on our roads by improving public transport infrastructure, are two examples that could halve the UK’s total future use of critical resources by 2030, compared with the current trajectory. This is a no-brainer, so why are the Government still resistant to action on reducing demand for electricity?
Secondly, I urge the Government, through the Minister, to address recommendation 30 in the report that the Government should set out clear plans for developing industrial-scale recycling of batteries in the UK, including ecodesign rules to make them easier to disassemble. It is another oversight of the critical materials strategy in that it fails to expedite a circular economy and create a market for safer, cheaper and more secure supply chains of recycled materials for battery manufacture. The EU has already introduced rules, and it is time that we tried at least to match them.
We have an excellent car manufacturing industry, but the report concludes that we risk losing it to our European competitors if we cannot meet the deadline of 2027, by when the rules of origin conditions for sale of vehicles to the EU will kick in. This will require the battery in EVs to be wholly made in the UK or EU, and 55% of the rest of the car to be made in the UK or EU, for tariff-free access to the EU. At our current trajectory of battery manufacturing capacity, we will lose production to the EU or other competitors abroad. In October, BMW announced that its hatchback and small SUV electric Minis will start being built in China. Its electric Countryman model will be built in Leipzig, Germany. The noble Lord, Lord Patel, has cited several other examples. This, I fear, is a sign of things to come.
Can the Minister say what urgent steps the Government are taking to meet the 2027 deadline agreed in the TCA? It might be too late for some of our car manufacturers, but it might protect others. In his response, can he reference the situation at Britishvolt and bring us up to date with the Government’s views on its future viability?
In 2017, the then Business Secretary, Greg Clark, announced the launch of the £246 million Faraday Challenge to establish the UK as world leader in battery technology. It was a start, but since then there has been little follow-through. Investor and industry confidence has been further damaged by the abolition of the Industrial Strategy Council.
In conclusion, I refer to recommendation 31 of the report, that the
“Government should explain to industry what will replace the industrial strategy”—
something that is sorely needed if we are to stay at the forefront of next-generation batteries and realise a successful future for our fuel cell manufacturers.
Lord Naseby (Con)
My Lords, I wholeheartedly welcome this report from the noble Lord, Lord Patel, and his committee. It is absolutely timely. While it focuses primarily on vehicles, I would like to look at the broader scene a little bit. However, before doing so, I declare an interest in that I have a modest equity holding in a couple of stocks that are quoted on the London Stock Exchange. They are hydrogen companies.
I start with the report from Goldman Sachs, which appeared in the Financial Times either last Saturday or the one before, in which it highlighted the fact that the US and Europe can cut their dependence on China for electric vehicle batteries through more than $160 billion in new capital expenditure by 2030. It pointed out that China today produces three-quarters of the world’s batteries and dominates production of their materials and components, citing the fact that in the USA
“South Korean conglomerates LG and SK, who have been attracted by massive subsidies from US taxpayers”,
are forecast to achieve from 11% to 55% of that market in a three-year period. The question arises, if the US can do it, why on earth are we not parallel with the US? Clearly, we are not—we are clearly behind the curve.
Rather than repeating what the committee has said, I thought that it would be more helpful to look at a case history with which I was involved, to some degree, when I was on the Select Committee on energy in the other place: the change from coal gas to North Sea gas. That was a massive change, with 40 million households converting to North Sea gas, involving at least 30,000 men and women to do all the work over a period of time. That was a huge achievement, and it was done well—partially because there was a workforce there to do it. It seems that one of the key elements that is not quoted in this report is the involvement of our unions today. Two unions stood out at that time: the GMB and UNISON. If you talk to them today, as I did a few days ago, you will find that they worried stiff about the necessary labour force. Only 12% of the relevant labour force is under 30, yet we should look at the situation with BT, which is laying off its older workforce. So one of the challenges that His Majesty’s Government need to look at is the workforce. That means looking at every level in that area, including our universities, technical colleges and apprenticeships. It may be happening—I do not know—but I would welcome hearing from my noble friend the Minister that the Government are aware of that challenge.
Of course, that particular challenge is not just domestic because, in terms of hydrogen being inserted into existing natural gas, probably at a 20% level, gas is firing our factories up and down the country—so that, again, is another massive challenge. So I ask my noble friend on the Front Bench for reassurance that he recognises that, while the vehicle market is absolutely vital, there are industries alongside that which will produce the goods and facilitate the conversion of our boilers up and down the country from the existing pure natural gas to some combination of natural gas and hydrogen.
Lord Liddle (Lab)
My Lords, I am no technical or scientific expert in this field, but I did read the report of this committee as soon as it came out, and I found it a very good exposition of the failure of government to work effectively with the research sector and business to develop in Britain the native industries of the future. That is one of my main political concerns.
The second paragraph of the report points out the problem we have here; it says that
“we were astonished by the stark disconnect between the optimism of Ministers and officials that the UK could retain its position in the automotive sector, and the concerns of our other witnesses that the UK is far behind its competitors and faces significant challenges”.
I wonder whether the Minister agrees with that conclusion and, if not, whether he will explain to us why he does not agree with it. This was said 17 months ago, when the report was published, but the situation has become even more desperate in that time. I did a bit of newspaper research with the help of the Library on how things are going. I note, for instance, that this year the
“UK production of cars has tumbled from 1.7 million per year to just 866,000”.
This is in what used to be one of our most successful industries.
I think that the noble Lord, Lord Patel, referred to the same newspaper article that I read in the Times about a week ago. I want to emphasise it again because I would like an answer from the Minister as to whether he agrees that this represents the situation:
“Recent months have been a slow-motion car crash for the nation’s pretensions to become what successive prime ministers have promised would become a ‘global hub’ of the electrified automotive industry.”
We have the examples of BMW and Johnson Matthey, and the fact that Britishvolt is near bankruptcy. Where is there any positive news, other than, incidentally, news of the Chinese-owned battery company that is getting ready to manufacture alongside Nissan in Sunderland, which I welcome and do not see any particular problem with?
When you look at what is happening in Britain by comparison with overseas, it is a worrying situation. The Faraday Institution, which noble Lords have referred to, counts 41 projects in western Europe that are under way. Only three of them are in the UK and the only one that is going well is the one that I referred to: the Chinese company operating beside Nissan. We are in a weak position. Germany has 12 gigafactories opened or planned, while Hungary, France and Italy are making strong preparations. We are losing the Mini from Oxford.
Something has to be done and I would like to know what the Government are planning to do about this crisis. Do they recognise that there is a crisis, because there is? When Greg Clark was Secretary of State, we had a certain consistency and coherence in our approach to industry for the years of Mrs May’s premiership. In the last three years, we have had five different Secretaries of State for Business: Andrea Leadsom, Alok Sharma, Kwasi Kwarteng, Jacob Rees-Mogg and Grant Shapps.
What sort of chaos have these changes produced? What grip do Ministers have on what is going on in the department? What leadership are they offering in this field to try to rescue us from impending disaster? That is the question that I want the noble Lord, Lord Callanan, to answer at the end of the debate. I do not think that they have done very much, because they do not have an ideological approach that is about working closely with businesses to develop new growth opportunities and new businesses of the future.
This was not the approach that Mrs Thatcher adopted in the 1980s when she led the renaissance of the British car industry. She saw the opportunities of the single market and the opportunity to bring overseas companies into Britain to re-establish this great industry. We are in danger of losing all that now. It is not that the Government have not had some successes—I would give them high marks for the Vaccine Taskforce and how it worked—but what is the barrier to Ministers rolling up their sleeves, getting on the telephone and trying to sort out the mess that this report has detailed? If the Minister can answer that question, I will be very happy.
Lord Teverson (LD)
My Lords, I first declare my interest as a director of and shareholder in Aldustria Ltd, a battery storage company, and a trustee of Regen, a renewable energy trade association—I think that that is the best way to describe it. Like many other noble Lords here, I very much welcome the report and congratulate the committee and its chair on it.
One thing that always seems to be forgotten outside this area is the timebomb in the trade and co-operation agreement that is around the 2007 rules of origin and when the percentages come into force. There are different ones for cars, cells and assembled batteries and they are a real challenge to that industry.
Soon after the EU referendum, one substantial vehicle manufacturer in the west of England, Honda, at Swindon, was straight on to me, and I am sure to other Members who were interested in the west of England economy, and said, “If something isn’t sorted out on rules of origin, the automotive industry in this country is going to be dead”. And, of course, Honda has gone; it is no longer there, which is a huge blow to the economy of Swindon. It decided to get out while the going was good.
I am not going to go on hugely about vehicles, because that is what other Members have already done, but the point has come over strongly, in the report and in the Faraday Institution’s work, that at the end of the day it is not just around tariffs—we export around 80% of our car manufacturing and 50% of that goes to the EU—but location. In electric vehicles, batteries are the most substantial accessory or part of the vehicle—quite obviously. There is a huge benefit in terms of colocation between the rest of the manufacture and assembly of automobiles and the gigafactory being close by. If we do not have those gigafactories, almost whatever the tariffs are, those manufacturing centres will disappear out of our area.
I want to move on to something that my noble friend Lady Sheehan has mentioned. It comes also from what the noble Lord, Lord Lilley, referred to. It is around resources and the circular economy. If there is one challenge in this area that is being overlooked, although the committee did look at this area, it is the reuse of scarce resources and rare earths that are used in a lot of electronic goods, in automobiles and in batteries. The stranglehold is largely in China and some other economies as well. We need to make sure that we have a circular economy ability to recycle batteries. On the whole they can be refurbished fairly easily. Often when they are at the end of their life, only one or two cells have gone, which can be replaced. Also, they can then be used for other purposes and have a second life. That industry, I believe, is one area where we could get well ahead. Europe is already on its way, but I believe that it is important for both our resource security and for having a viable industry in this area that we are good on the circular economy as well.
In my last comments, I will come to a completely different sector, which is stationary batteries and those that are to be used in grid balancing. It is chaotic at the moment. One of the big things that it is almost impossible to do if you are a developer is to get access to the grid. It is not just around battery storage but around housing developments—even in west London—and around renewables, solar and offshore wind coming into the UK grid system. To quote a current example, a connection in the south-west given by the local transmission network, Western Power Distribution, is for 2038: that is where the queue has got to. There is no way under Ofgem rules at the moment of undoing that queueing mechanism and getting the right priorities for the right place.
If we want to get to a net-zero electricity and energy system, we need batteries to be a part of that. In fact, if energy storage is seen as a solution to the grid and not a problem—not an extra load—we can in fact move a lot quicker towards net zero and a resilient grid system. This is a serious problem at the moment. The figures I looked up say that 25 gigawatts of battery storage is needed to get to net zero—if they are four-hour batteries, that is roughly about 100 gigawatt hours, obviously. As I say, the connection wait times are now out to something like 2038.
Now this is a sector that does not require any public money at all; it is completely mercantile. But it is unable to bring forward that balancing, and through balancing bring down the cost of energy into the future. So I would be very interested to hear from the Minister what the likelihood is of us solving that. There are various studies going on at the moment, but they are slow and there is not really much light at the end of the tunnel. Frankly, what we need in terms of the national grid is anticipatory investment, not the reactive investment that we have at the moment.
I have a last question for the Minister. In terms of battery storage, there were amendments to change battery storage from being defined as an energy generator in the Energy Bill. I know that he will not say when the Energy Bill will come back to this House, but can he say when there might be a decision as to when the Bill might come back to this House?
Lord Mitchell (Lab)
My Lords, despite the ravages of Covid and the requirement for much of this report to be compiled remotely, the noble Lord, Lord Patel, has done a masterly job in leading us to produce this crucial study. We must thank him for it. We must also thank the team who helped us in crafting this high-quality document, again under the difficult conditions of lock- down. Together we present to your Lordships’ House a report of great depth, which contains strong recommendations. Such a pity, therefore, that the Government have given us such short shrift.
This report was presented to your Lordships’ House in July 2021. In September of that year, we received the Government’s response—a document I can best describe as “thin”. If noble Lords can believe it, the narrative of our report talks about our hopes for COP 26 in Glasgow. Since then, COP 26 has been and gone—and so too has COP 27 in Egypt. Can somebody please explain to me why, as we approach 2023, we are only now debating this report for the very first time? Procrastination does not make for good policy.
Certain themes come from the report that are screaming for government focus. The first is the plea for long-term commitment. Scientists and industry need strong direction. Industry, contemplating massive long-term investments, needs to know the ground rules, and to know that the rules will not change. Individuals looking to their careers, whether as academics or scientists, need to know that the rug is not going to be pulled from under their feet. Sadly, this is not the case. It all feels uncertain and unpredictable.
Another feature that we saw when we were taking evidence, and which has been mentioned today, was the contrast in attitude between Ministers and officials compared with those at the coal face. Ministers were gung-ho about our country’s advances in battery technology; scientists and industrialists were much more cautious. My money is with the experts. Even now, I kick myself for not asking every witness just one question. I should have asked: “Do you believe that net zero by 2050 is going to happen?” Sadly, I asked it only twice. Ministers agreed, of course; those who knew lowered their eyes.
Electric vehicles are not pie in the sky; we see them all around us. Tesla’s market cap exceeds that of every other automobile producer. The Government have set a directive that no petrol or diesel cars will be sold beyond 2029. I think that that is a very positive goal, but the Government need to do their part to ensure that it happens.
All of us know of the panic that we get into when our mobile phones are just about to run out of battery. Electric vehicles evoke an enhanced panic of being stranded. Charging points are key to dispelling vehicle panic. It is forecast that we will need 325,000 charging points by 2032. Can the Minister say whether we are on track to hit that target? I would also like to know what the Government’s plans are for encouraging hydrogen charging points. Few charging points lead to reduced take-up—it is as simple as that.
I turn to the geostrategic challenges posed by battery and fuel cell technology and development. This year we have seen all too clearly our vulnerability to energy blackmail. We simply cannot allow any hostile country to hold us to ransom again. China produces 75% of the world’s batteries. It plans to have 149 gigafactories by 2030. The EU has 19, the US 11 and we have two. It makes us very exposed, and it is a clear demonstration of how China plans to dominate automotive production and electricity storage. As the noble Lord, Lord Naseby, mentioned, according to an upbeat report by Goldman Sachs featured in the FT this week, the US and Europe have the opportunity to become independent of China by 2030. It will require a capital expenditure of $160 billion. That may sound a lot but, it is less than the cost of HS2.
The recent US Inflation Reduction Act is showering vast amounts of money in the US by way of subsidies and tax credits on renewable energy and electric vehicles. As has been mentioned, a South Korean firm has invested $3 billion in a cathode factory in Tennessee. I agree that we need our own equivalent of the IRA in terms of long-term financial commitment, otherwise we will just shuffle along.
As has been mentioned, Britishvolt is a prime example of a tepid government response. Launched with such fanfare only three years ago, it is now on life support in the battery ICU ward. Can the Minister say whether the Government are committed to support Britishvolt at this crucial moment? If they are not, they should be.
Success in modern technologies comes not from slogans and bluster but from hard-nosed, long-term commitment. The successful quest for the Covid-19 vaccine showed that in sharp relief. The title of our report begs two questions. Has our battery strategy gone flat? Is the net-zero target at risk? I think the answers are yes and no. Will the Minister please tell me that I am wrong?
Baroness Randerson (LD)
My Lords, I start by congratulating the committee on its report, which is brutally clear in its conclusions. I have been fascinated by this debate. I have sat in many Grand Committee debates here but I have never come across one that has aroused such strong views across the Room.
The first sentence of this report says it all:
“The UK’s current trajectory of battery manufacture is insufficient to support the automotive industry’s transition to electric vehicles or to meet our net-zero commitment.”
The committee goes on to say—the noble Lord, Lord Liddle, has already quoted this—that it was astonished at the stark contrast between the optimism of Ministers and the concerns of the experts who came to give evidence.
These conclusions stand even more clearly a year on from the writing of the report. This Government—we are of course three Prime Ministers on from when it was produced, but they are still the same Government—never cease to disappoint. Their ambitions sound good, if rather vague, their rhetoric is florid and fanciful and their practical support for business and industry fails at every step. Only last week, the Chancellor’s answer to perceived misuse of some R&D tax credits was to cut them in half, rather than deal with the problem of fraud and tighten up procedures.
For seven years, I have been arguing for a more proactive approach from the Government to battery technology and the availability of EV charging to ensure what this report calls “charging for all”. I have been very frustrated by the lack of progress. We do not even yet have the simplicity of a proper, straightforward payment system. The Government’s response to this report is disturbingly vague and avoids many of the precise questions the report posed. They continue to fall into the trap of being unrealistically upbeat.
The SMMT—the Society of Motor Manufacturers and Traders—is clear that the UK must expand its domestic battery production to retain domestic auto manufacturing in the long term. It estimates that the UK needs at least eight gigafactories by 2040, with approximately 120-gigawatt capacity. Currently there is a capacity of only 2 to 2.5 gigawatts, and only two companies: Envision and the proposed Britishvolt factory. Together, if they fulfil their ambitions, those two might produce 40 gigawatts by 2030—but 120 are needed.
If that were to be achieved, the prizes would be great. EV transition alone will be worth £12 billion to the economy in terms of batteries for the UK supply chain. The EV market is developing rapidly; there were 53,000 UK-manufactured vehicles this year, almost 80% of which were exported. One-quarter of all our vehicle exports are EVs. However, we face huge challenges. Rules of origin under the TCA will apply from 2027, but some related issues apply from 2024 and will make life very difficult for the industry.
We also need a major reskilling of the workforce and training of new workers. The recent Budget produced nothing for further education. We need a national skills strategy; for example, we need about 10,000 qualified workers to manufacture battery cells, but we have almost no such qualified workers at the moment. The report points out that government support, for example via the Faraday battery challenge, has been lower and of shorter duration than that of our competitors. The Faraday Institution receives £30 million per annum, compared with the European Commission’s €3.2 billion aimed at seven member states up to 2031. That is £270 million per annum for 10 years. In France, there is an investment of €960 million and in Germany an investment of €1.25 billion. They dwarf the UK in their ambition and commitment.
The truth is that, by leaving the EU, we have cut ourselves off from the benefits of scale in research and development. The Government now face a stark choice. They need either to massively up the scale of their commitment to R&D to greatly outspend our competitors or to tone down their rhetoric and modify their ambitions. They might even consider a Swiss-style trade agreement.
Lord Krebs (CB)
My Lords, one advantage of coming near the end of the list is that many of the things one was going to say have already been said by others, and I can summarise by saying “I agree”. However, I start by thanking our chairman, the noble Lord, Lord Patel, for his excellent chairmanship of the committee and reiterate the thanks to our specialist adviser Professor Clare Grey for her advice and guidance.
We were told in our inquiry that the availability of raw materials is one of the main limiting factors for battery manufacture, and the noble Lord, Lord Lilley, has given such an articulate and comprehensive summary of the situation that I do not need to say anything more about it, other than to take just one example from the FT on Monday, an article about graphite, a crystalline form of carbon. Every EV contains 25 kilos of graphite —so quite a lot of it. Demand is predicted to rise threefold in the next four years. The price of graphite has gone up by one-third in the past year, 65% of the world’s graphite is currently mined in China and 85% of the graphite is processed in China, which speaks to the point mentioned by the noble Lord, Lord Mitchell, about dependence on certain countries for supplies.
I want to focus on another aspect of the supply chain, which is the fact that the raw materials often come from countries with poor human rights records and poor environmental standards, so when you step into your EV and drive off, do you think about the fact that the cobalt in the battery may have been mined using child labour in the DRC? Do you think that most of the raw materials in your battery might have contributed to serious pollution of the environment as well as damage to human health? For instance, we were told that in South America the extraction of lithium from brine uses large volumes of water and can lead to contamination of both the aquatic and terrestrial environments.
As has already been mentioned, against this background, we made two recommendations. We asked the Government to produce a critical raw materials strategy in order to plan for future supply issues, and we also asked the Government to set out plans for industrial-scale recycling and to require manufacturers to conduct a full life cycle analysis of the environmental and social impacts of batteries.
As the noble Lord, Lord Patel, and other noble Lords have mentioned, we now have a critical raw materials strategy, but I am told that it is a high-level document without a detailed road map for implementation. Equally, the critical minerals intelligence centre established under the strategy at the British Geological Survey has, I am told by scientists from the BGS, no clear remit, so will the Minister tell us when the road map will be published and when the purpose of the intelligence centre will be defined?
I now turn to recycling, which has already been mentioned by the noble Baroness, Lady Sheehan, and the noble Lord, Lord Teverson. Northvolt, the Swedish battery maker, has said that by 2030 it will have developed three gigafactories with a combined annual output to power more than 2 million electric vehicles and that these factories will obtain half their raw materials from recycling. Will the Minister update us on the UK’s level of ambition for recycling? Does it match that of Northvolt? The Government’s response on this was extremely vague, with reference to an inter- disciplinary circular economy centre funded by UKRI, but no specific targets or dates for recycling.
We also asked the Government to introduce incentives and regulations to speed the transition to more sustainable manufacturing. The European Union proposes to introduce legislation on recycled material in batteries by 2030 and for all batteries sold in EVs in the EU to declare their carbon footprint by 2024. Therefore, I ask the Minister whether the UK intends to use its Brexit freedom to go further and faster than the EU, or use it to lag behind—or are we intending to follow the EU’s requirements?
As many other speakers have said, EVs are undoubtedly crucial for our trajectory towards net zero, but they come with costs as well as benefits—and I have referred to the social and environmental impacts of sourcing the raw materials. I now want to refer briefly to another kind of cost. EVs are typically about 30% heavier than their petrol or diesel equivalents. Furthermore, the most popular models of EV in the UK are nearly all SUVs. The result of this is that our city streets are becoming increasingly populated by large, heavy vehicles. Can the Minister tell us what assessments the Government have made of the consequences of this for, first, damage to road surfaces, especially in urban areas and, secondly, the safety of other drivers, pedestrians and cyclists? Furthermore, as a result of these assessments, are the Government considering following jurisdictions in the US such as Iowa and New York, and countries such as France, all of which have introduced, or are planning to introduce, an extra tariff for vehicles above a certain weight?
In asking these questions, I declare an interest as a daily cyclist in Oxford, where the combination of potholes and tank-like SUVs on the narrow streets presents a serious hazard to those of us who chose a transport method with an even lower environmental footprint than electric vehicles. I look forward to the Minister’s response.
Baroness Walmsley (LD)
My Lords, as a member of the committee, I thank the noble Lord, Lord Patel, for his excellent chairing of our inquiry and his introduction today. I also thank all the committee staff and advisers, who have done such a good job. We heard from a very wide range of experts, to whom I am also grateful.
The subject that we chose could hardly be more apt for this week, as COP 27 comes to an end, since batteries and fuel cells should play such a crucial role in our ability to mitigate climate change and reach net zero. I am pleased to note that, since the report was published, the Government have met a number of our recommendations, committing to phase out non-zero emitting HGVs by 2040 and publishing the hydrogen and critical minerals strategies, about which more later. However, our witnesses suggested that the Government have a long way to go if they are to realise the potential of the UK’s role in the production and use of batteries and fuel cells.
As the noble Lord, Lord Liddle, pointed out, even the media have noticed that, unfortunately, we have already lost the race to become a global leader in the production of lithium-ion batteries. As the noble Lord, Lord Patel, warned, this provides a serious danger to our UK automotive industry. If we are even to reach our not very ambitious targets for EV cars and vans on our roads, it will have to be done by importing batteries and complete vehicles, and we can be held to ransom by China. The rules of origin laws coming in in 2027 will also mean higher costs and loss of markets, unless we can increase our own production. My noble friend Lord Teverson called it a timebomb, and he was right.
The Government have stated an ambition to build eight gigafactories to manufacture batteries by 2030, but we have only one, and Britishvolt is struggling to obtain its investment in its proposed factory in the north-east. Is that because investors are unsure of the Government’s support and commitment in the long term? I suspect so. Can the Minister reassure us?
As our witnesses told us, there is an opportunity to take a lead on next generation alternative battery technologies, such as solid-state, lithium-sulphur, sodium-ion, et cetera. Focus and funding of research and development of those new technologies is crucial. However, as the noble Lord, Lord Patel, mentioned, the funding of the Faraday Institution is guaranteed for only two years and has no allowance for inflation for that time, meaning a real-terms cut. That means that there will be no PhD cohort starting in October 2023 or 2024. Will the Minister please look at this?
In addition, there is no significant funding in the Faraday Institution project for redox flow batteries needed for static batteries for power storage. As my noble friend Lord Teverson said, this will be essential as the demand for power, for recharging and other things, increases. Will the Minister talk to UKRI about this issue? The Faraday Institution has also brought together a consortium of seven partners to develop a world-leading prototype solid-state battery, but at least two of the partners have either taken themselves abroad, as is the case with Johnson Matthey, or are struggling to fund their battery factory—the case with Britishvolt. So how will this affect the objectives of that consortium? Badly, I suspect.
To encourage uptake of EVs in the domestic market, we need to look at the factors that deter purchasers and fleet owners: cost, range and the charging network. On cost, the Government have just removed the grant that was available to reduce the price premium, and last week they announced that EVs will have to pay vehicle excise duty from 2025. Indeed, some will have to pay a very high rate of VED, because they are expensive. What is the sense of this, if we are going to reach or exceed our targets? The range is gradually increasing as the work progresses on making lithium-ion batteries more efficient. But this will take time, which makes the motorway and major road charging network even more important. Having queued up many times to use the only working charger of two at a service station, I am painfully and personally aware of this, as is my noble friend Lady Randerson. Our committee recommended a vastly increased number of public charging facilities, since many people cannot charge at home. What are the Government doing to speed this up?
Something could be done right away, however, to encourage people without a home charger to get an EV: reducing the VAT on power downloaded from public chargers. This is at 20%, whereas people like me who are charging at home pay only 5%. Can the Minister do this right away? The cost of upgrading the power supply to serve workplace chargers is high, which will deter blocks of flats, workplaces, petrol stations, supermarkets, et cetera; will the Government increase the support for this?
Skilled workers have been mentioned by several speakers. To reach our targets, we need many thousands of skilled workers for the manufacture and maintenance of batteries, fuel cells, vehicles and the chargers and grid needed to service them. The Government have set out a number of industry training schemes, as my noble friend Lady Randerson noted, but there was no new funding announced in the Autumn Statement for the further education colleges that will be key to delivering them. Was that an oversight by the Chancellor?
As the noble Lord, Lord Lilley, pointed out, many of the essential materials needed for current batteries are not found in this country, and the new critical minerals strategy is important here. However, we hear from researchers that there is no pathway and that funding for delivering the strategy is minimal. Can the Minister assure us that there will be more funding coming down the track?
One way to ensure the pipeline of minerals and deliver a sustainable circular economy is through recycling, as my noble friend Lady Sheehan pointed out. The early batteries were difficult to recycle, but this can be made easier through recycling by design. Can this be made mandatory through regulation, at least for those made here? I think that there is one recycling facility for these materials in the UK; batteries are having to be shipped to France for the recovery of vital materials. I understand that the University of Exeter is working on the reuse of cobalt, lithium and rare-earth elements, but we need development and manufacturing facilities too. What are the Government doing about that? My noble friend Lord Teverson also talked about reuse for static batteries for grid balancing.
I make two final points. First, given that some renewal energies are intermittent, there will be a need—in addition to a smart grid, smart meters and so on—for the Government to ensure that energy providers offer variable tariffs to customers to incentivise behaviour change and spread demand across the day. What are Government doing about this?
As my noble friend Lord Teverson said, there is also the need for large-scale battery storage to even out our supply. They also have a role in ensuring that no precious captured energy from wind or solar is wasted. I have always thought it was a terrible waste to have to pay wind turbine operators to stop the blades turning when the wind is blowing, when grid demand does not match supply. Will the Government widen the remit of UKRI, the Faraday Institution and the UK Battery Industrialisation Centre to include static batteries?
I have not yet mentioned fuel cells and hydrogen but, to be very brief, they have an important role in heavy transport, marine and rail as well as space heating, such as in Japan. What are the Government doing to encourage more research on this? As regards reaching net zero, however, only green hydrogen produced by electrolysers has a serious role to play. What is really needed is a large-scale demonstration plant onshore, near to a major wind farm, to use the excess energy to produce green hydrogen. Can the Minister say whether there are any plans for this? We will also need hydrogen storage. Let us not make the same mistake as we did with gas, when the Government allowed the removal of the gas storage capacity, which has caused such a serious problem since Russia invaded Ukraine.
Our report calls on the Government to make many changes and to speed up our progress, particularly since transport is such a major contributor to our emissions. I look forward to the Minister’s positive reply.
Lord Bassam of Brighton (Lab)
My Lords, this has been an absolutely fascinating debate, I must confess. I have enjoyed listening to it. It has been fizzing with ideas and important points, and coming away from it I feel I have learned something. I do not think I have ever participated before in a deliberation on a Science and Technology Committee report, but clearly, I should do so more often.
I congratulate the noble Lord, Lord Patel, on his brilliance in steering the committee in the way he did, ensuring that the report was as thorough and insightful as it was. As other noble Lords pointed out, the only shame is that the report has taken so long to come before us for debate this afternoon. As somebody pointed out, COP 26 and COP 27 have been and gone, and that time has passed and been lost.
As the noble Baroness, Lady Randerson, pointed out, the opening lines of the summary perfectly pinpoint the problem: if we do not alter the current course of UK manufacture to support the car industry’s transition to electric vehicles, we will not hit our net-zero targets. That is a pretty stark observation. As the report says:
“Despite recent announcements … the pace and scale of building these facilities will not meet demand”,
and, as a number of noble Lords explained, industry will simply uproot itself and move overseas.
The report was clear that the Government needed to establish a strategy for transport, hydrogen and wider decarbonisation. The committee argued that the Government should produce their promised hydrogen strategy as soon as possible. In fairness, they have now done that, but does it match the risks that the committee identified? I do not think so. It is the “stark disconnect” that my noble friend Lord Liddle drew attention to.
The committee also argued that the Government should support the development of UK battery industry supply chains and establish a strategy for securing access to the raw materials needed to make the batteries. The noble Lord, Lord Lilley, pointed very carefully and clearly to some of the problems we are encountering in the critical minerals strategy, which is another warning to the Government.
The committee also recommended that the Government should ensure that the automotive industry has access to a sufficiently skilled workforce to support the transition from mechanical to electrical technology. A number of Peers drew attention to that, in particular the noble Baroness, Lady Randerson, and the noble Lord, Lord Naseby. The problem here is that we are already far behind our European rivals. As has been said, we have one gigafactory in operation while Germany has five and a further four in construction. France and Italy are set to have twice the number of jobs in battery manufacturing that we are set to have. This simply is not good enough, and it means that our car industry will rapidly become unsustainable.
The committee recommended new research and innovation institutions for fuel cells. It described fuel cells as the Cinderella of UK energy policy, receiving less attention than they deserve, and surely that is right. In response, the Government mentioned the launch of the hydrogen for transport programme to support the development of fuel cell technology and said that they were providing backing through the fuel cell electric fleet scheme. However, these initiatives date back to 2017 and 2016 respectively, so will the Minister say what real progress has been made since?
The committee also called for work with Ofgem to ensure appropriate regulation and incentives are in place to facilitate the expansion of the electricity network. Specifically, the argument was made for the importance of developing smart systems for managing supply and demand. It also said that the Government and Ofgem need to supply the expansion of other more sophisticated services, such as smart tariffs and battery storage. Most importantly, the committee called for the expansion of the public charging network. The fact is that the vast majority of charging points are still located in London and the south-east. The committee wisely argued for the commitment to delivering 325,000 charge points by 2032, as recommended by the Government’s own independent advisory body, the Committee on Climate Change. In response, the Government said that they would deliver £1.3 billion in funding to support the rollout of charge points for homes and businesses and on-street charge points. In March 2022, Taking Charge, the policy document produced by the Government, stated that we would have 300,000 charge points by 2030, but that was rapidly undermined when in June this year the Government ended the support scheme then in place for supporting the electric vehicle grant that focused on charging. Surely this should be the moment where the Government are pulling out all the stops to transition to electric vehicles to reduce our dependence on fossil fuels. This is a short-sighted decision that will simply put electric cars out of reach for many. Perhaps the Minister will enlighten us today about the number of charging points now in place and what sort of plan there is for each year to hit the latest target.
I compare this with the attitude of places such as Norway, where I went on holiday this summer. I hired an electric car and experienced no problems with recharge facilities. I was actually stuck for choice when recharging. That was on the Lofoten Islands, their equivalent of the Outer Hebrides. We need the Government to embrace the means and the technology.
The committee also urged the Government to decide whether to phase out the sale of new diesel heavy goods vehicles and recommended that the infrastructure is put in place to support this objective. In a far-sighted proposal, it said that the Government should
“provide a clear timeline for research and development of technologies”
necessary to support this transition, including batteries and fuel cells. Thus far, it seems that the Government have got no further than analysing the responses to their 2020 consultation on banning new petrol, diesel and hybrid HGVs. The sector needs clarity, so when will the Government’s response be published? Will the Government also be spelling out the technologies required to ensure this transition is possible? I know the Government confirmed that they are committed to phasing out the sale of non-zero-emission HGVs by 2024, a welcome move, but surely the announcement in May this year of just £200 million to support this transition is barely adequate as a demonstrator programme.
Finally, the report calls for the acceleration of the rail electrification programme to accelerate the transition away from diesel trains. Will the Minister explain where we have got to on this issue? The Government did not respond to that point when replying to the report. Perhaps they can this afternoon.
Thus far the Government’s response to the report has fallen short of where it needs to be. We need the Government to be speedier in their response to the issues the report raises. We also need them to work in partnership with business better to understand the business perspective in tackling the challenges that getting to net zero imply.
It was drawn to our attention earlier in the debate that we have had a change in leadership, with five Secretaries of State in four years, so we have had plenty of leaders, but not much leadership. Surely, there is a big opportunity for the UK in meeting the challenges. By expanding the manufacturing capacity of battery production nationally we create new jobs and opportunities wherever—the West Midlands, the north-east, the north-west and the south-west. We need an industrial strategy that delivers that promise and opportunity as we move to a greener economy.
For our part on the Labour Benches, we think that the Government lack ambition. It is not just Labour that thinks that—senior industrial leaders do too. In the meantime, this report helps to provide the UK with a useful steer in the right direction and should act as a wake-up call to government. For that, we should all be very grateful to the committee and its members for their wisdom and foresight.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I am grateful to the noble Lord, Lord Patel, for securing what I agree with other noble Lords has been a fascinating debate and for the excellent way in which he introduced the subject and the brilliant leadership that he provides to his committee, which the number of responses to reports from that committee suggest. I know that he is well respected across the House for the work that he does, so I am grateful to him for that. I also pay tribute to the other members of the committee and to all those who provided the written and verbal contributions that have enabled the preparation of such a thorough and well-thought-out report.
Given the clear priority of the topic, I hope noble Lords will be pleased, as the noble Baroness, Lady Walmsley, reminded us, that since the report was issued, the Government have made significant progress on many areas recommended by the committee. We have continued to be clear about our ambitions and expectations —for example, in setting out not only that we will phase out all new diesel HGVs from our roads by 2040 but the intervening milestones that will see us on a trajectory to make that a reality, building on the formal consultation and close engagement that we already have on this topic with industry.
The Government recognise the challenges that such ambitions bring. To address a question posed by the noble Lord, Lord Mitchell, and the noble Baroness, Lady Randerson, we do not apologise for setting this bold ambition; rather, we need to continue to focus our efforts, and the considerable efforts of British business, industry and society, on solutions to many of the challenges that we face along the way.
Naturally, many noble Lords focused their contributions today on these challenges. I shall do my best to address as many of these comments and questions as possible. However, it is worth framing the issue briefly on what the Government are already doing. We have published our net-zero, hydrogen, innovation and critical minerals strategies. Just last month, we announced a further £211 million of funding to support battery R&D through yet further investment in the world-leading Faraday battery challenge programme, which was mentioned by many noble Lords in this debate, bringing the overall budget of the challenge to £541 million. I am sure that the noble Baroness, Lady Randerson, will want to welcome that as being on a par with her favourite European Commission investment.
Our flagship support programmes have continued to drive real-world successes. Just last month, the Secretary of State attended Green Lithium, supported through our pioneering automotive transformation fund, as it announced Teesport as the site of the UK’s first large-scale merchant lithium refinery, providing battery-grade materials for use in the electric vehicle, renewable energy and consumer technology supply chains. I am sure that my noble friend Lord Lilley will welcome that development.
I move on to some of the other points raised during the debate. A number of noble Lords, including the noble Lord, Lord Patel, in his introduction, the noble Viscount, Lord Hanworth, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Mitchell, asked about companies in this space, including Britishvolt, and about the Government’s plans to attract investment in gigafactories for the production of batteries in the UK.
Noble Lords will understand that I cannot comment on the commercial discussions that the Government may or may not have with private companies or their prospects. What I can say in public is limited in that regard, but the Government have ongoing discussions with a number of companies in this field. It is not our approach to comment on speculation or the commercial affairs of private companies, but we will continue to progress an ambitious pipeline of potential investments which will help to grow our electric vehicle supply chain. This is a priority for the Government.
As we do that, a key plank of our approach is to continue to work with the many investors with which we are in contact through the automotive transformation fund. In 2021, the net-zero strategy announced £350 million of funding in the automotive transformation fund, in addition to the £500 million announced in 2020 as part of the 10-point plan. The ATF supported the £1 billion electric vehicle hub in Sunderland—in my own area, the north-east—in partnership with Envision AESC, which the noble Lord, Lord Patel, and others mentioned. It safeguards 6,200 jobs at Nissan, including more than 900 new jobs, and 750 new jobs at the new Envision AESC gigafactory. The fund has already enabled the announcement of Pensana’s £145 million investment in east Yorkshire to process the critical minerals used in magnets and a £60 million investment by Johnson Matthey in Hertfordshire to develop hydrogen technologies. Through it, as I mentioned earlier, we also backed Green Lithium to build a refinery in the north-east. We have also received a number of other expressions of interest in the scheme and will continue to engage closely with investors. As I said, I cannot go into details in public at the moment, but I and other ministerial colleagues will update noble Lords on this important topic as soon as possible. We will continue to progress these investments.
The noble Lord, Lord Patel, asked whether the UK can still meet its commitment to phase out petrol and diesel cars by 2030. I am delighted to repeat my confirmation to him that we will end the sale of petrol and diesel cars and vans by 2030 as planned. To support this, the Government have committed to introduce a zero-emission vehicle mandate to require a minimum percentage of manufacturers’ new car and van sales to be zero emission at the exhaust from 2024. We have been working with the whole UK automotive sector to ensure that it can do that and meet the needs of UK business.
I thank the noble Lord, Lord Patel, for welcoming the publication of the critical minerals strategy. He also raised the important question of how we will achieve its commitments. As my ministerial colleague in the other place, Nus Ghani, confirmed earlier this month, I am pleased to reassure the noble Lord and others that we will publish a refresh of that strategy by the end of the year. This will include a delivery plan for the commitments set out in that strategy.
The noble Lord also asked whether the UK intends to produce a strategy for the next generation of electric vehicle battery manufacturers. Through the strategies we have set out and the concrete mechanisms already at our disposal, such as the ATF, which many noble Lords mentioned, I hope the Committee will recognise that our strategy in this regard is very much one of activity. The strategy is important, but so is activity on the back of it. I also recognise the importance, brought home in this debate, of joined-up work across government. I reassure the Committee that we are looking very seriously at the best way of continuing to work across departments—BEIS, Defra, the Department for Transport, et cetera—and between government, industry and consumers, all of whom will have to be on board to deliver the important changes we will need.
The noble Lord, Lord Patel, and other Members asked about our commitment to hydrogen. As he noted, we have doubled our ambition to up to 10 gigawatts of low-carbon hydrogen production capacity by 2030, subject as always to affordability and value for money—I think the Treasury inserts that phrase into every ministerial contribution. At least half of this will come from electrolytic green hydrogen, drawing on the scale-up of UK offshore wind, other renewables and new nuclear. I very much agree with the noble Baroness, Lady Walmsley, that it is criminal that we pay constraint payments to wind farms not to produce electricity because the grid cannot handle it.
We aim to have up to 1 gigawatt of electrolytic hydrogen in construction or operational by 2025, with up to 2 gigawatts of production capacity overall, including CCUS-enabled hydrogen, in operation or under construction by 2025. The UK Hydrogen Strategy, published last August, outlines a comprehensive road map for the development of the wider hydrogen economy over the 2020s to deliver what is a very ambitious commitment for 2030. The British Energy Security Strategy in April 2022 built on that, with further commitments on electrolytic allocation, hydrogen transport and storage, and an attached certification scheme, which is also important. We also set out detail on our hydrogen production strategy in the July 2022 update to the market.
The noble Lord, Lord Patel, and other noble Lords asked the important question of when the Government will make a choice on the mix of different technologies; I think this point was also raised by the noble Baroness, Lady Sheehan. Let me use transport as an example to respond to that question. Here, the Government still remain technology neutral. As set out in the UK Hydrogen Strategy and transport decarbonisation plan, we see hydrogen as likely to be important where energy density requirements come into play and where infra- structure constraints or refuelling times make it the most viable option for heavy goods vehicles, locomotives and so on, where battery technology is not necessarily appropriate.
As outlined in that strategy, we expect that the role of hydrogen in transport will continue to evolve over the course of the 2020s and beyond. To date, road transport has been an early market for hydrogen in the UK. Going forward, we expect hydrogen vehicles, particularly depot-based transport, including buses, to constitute the bulk of 2020s hydrogen demand from the mobility sector. Fuel cell hydrogen buses have a range similar to their diesel counterparts.
The noble Lord, Lord Patel, and others also raised the important issue of battery safety and rightly asked me about plans to address this. The safety of electric vehicles and of their charging is of course of paramount importance to the Government and we keep this under regular review. Multiple safety systems are designed into EVs to protect passengers, emergency services personnel and other users from harm. However, we have to recognise that the risks are different and need to be understood and controlled. To consider EV fires, the Office for Zero Emission Vehicles has formed a steering group of experts from across government, industry and academia. The steering group identified research questions to further develop BEV fire understanding. The National Fire Chiefs Council has also developed national operational guidance for fire and rescue services across the UK. I finish my remarks on safety on a positive note: current evidence does not suggest that electric vehicle fires are any more likely to occur than in petrol or diesel vehicles.
I move on to the excellent contribution from my noble friend Lord Lilley, who raised a number of important issues about having access to sufficient resources and reserves of minerals to produce batteries. My noble friend is absolutely right to raise these issues; it is a challenge that we recognise. We are very familiar with the International Energy Agency analysis that he cited and indeed, as we set out in the UK’s first critical minerals strategy earlier this year, the UK is working with the IEA to explore ways to improve the security and supply of energy-specific critical minerals.
My noble friend raised a question on lithium and nickel reserves and the need for battery solutions to be found that may be mineral-intensive. I can tell him that the UKRI is already funding a considerable amount of research in next-generation batteries. The Faraday Institution has a £35 million portfolio in battery technologies beyond lithium-ion—as well as developing the next generation of lithium-ion batteries—namely in sodium-ion, solid state and lithium sulphur, with applications in stationary storage, electric vehicles and aerospace as well as other high-value niche markets.
The noble Viscount, Lord Hanworth, correctly noted the importance of supply chains being in close proximity to battery manufacturers. The Government are committed to supporting the automotive sector through the transition to zero-emission vehicles and the development of the associated supply chains, including through the ATF to support the automotive sector to meet the very important rules of origin provisions that a number of noble Lords quoted. This will of course recognise the significance of the UK and the EU markets for those manufacturing vehicles in the UK.
The noble Baroness, Lady Sheehan, mentioned that the Government need to do more to secure Britain’s place at the forefront of the battery revolution, and I agree with her, particularly on the importance of this issue. The Government are committed to growing the electric vehicle supply chain and, as I said earlier, we continue to work with investors through the automotive transformation fund to progress their plans to build a globally competitive electric vehicle supply chain in the UK. Indeed, the recent investment of over £200 million in the Faraday battery challenge, which I mentioned earlier, is further evidence of this commitment.
The noble Baroness also raised a question on the resilience of supply and the importance of recognising demand reduction—she and I agree on that. We also agree that the circular economy, design and innovation are all topics of significant attention in our critical minerals strategy, which will be part of the delivery plan that we will publish later this year. She also raised an important point about the market for recycled materials for battery manufacture. I am pleased to report that my colleagues in Defra are working with other government departments and the devolved Administrations and are currently reviewing the existing UK batteries legislation; they are working at pace to publish a consultation in the second half of next year. The intention is to create a regulatory space that supports the appropriate treatment of EV batteries, protects our domestic supply of critical raw materials and contributes to our net-zero ambition.
On the noble Baroness’s question about recommendation 31 in the report on “industrial strategy”, in October last year we published the net zero strategy, setting out our policies and proposals for decarbonising all sectors of the UK economy to help to meet the net-zero target. This is supplemented by a range of strategies relevant to today’s important debate: the hydrogen strategy, the innovation strategy and the critical minerals strategy. In addition, and of particular relevance to some of the specific points raised today, in July 2021 we published Decarbonising Transport: A Better, Greener Britain, containing 78 commitments setting transport on an ambitious path to net zero by 2050. The Government have an activist and outcome-focused approach to the delivery of the industrial outcomes through which I think those who have spoken today would wish to see the UK succeed, prosper and grow.
The noble Lord, Lord Teverson, raised the subject—which he has raised with me many times—of the energy security Bill. I am tempted, but, yet again, I cannot give him a precise commitment on timing. However, I can certainly say that I have heard what he and other noble Lords have had to say, and I am keen to move on this issue as quickly as possible, because I know that it is an important subject to individuals and many businesses across the UK. I hope to have a reply for him in the very near future, if that is appropriate.
In answer to my noble friend Lord Naseby’s points about the roles of other countries in this area, I note that two of the three pillars of our critical minerals strategy are on collaboration and enhancing international markets. Our engagement in the Minerals Security Partnership is just one example of where we are working right alongside allies on this important topic.
The noble Lord, Lord Naseby, the noble Baronesses, Lady Randerson and Lady Walmsley, and other Members raised the important issue of skills and supply chains. That is probably one of the key areas of focus for me in government at the moment. The Government are committed to safeguarding and growing the 155,000 jobs in the automotive sector across the UK. Ensuring that the sector has sufficient skilled workers to enable its transition towards net zero is one of our key priorities, and we are engaging closely with industry to consider further action that may be needed, including through the Automotive Council skills working group.
The noble Lord, Lord Liddle, accused the Government of failing to work effectively with research centres and businesses to develop the native industries of the future. The noble Lord is wrong, and my colleague Minister Freeman set out in the other place last week exactly what we are doing in this space. In response to his questions regarding resources, the circular economy is a challenge but one that we are embracing. Funding via the Faraday battery challenge through the Faraday Institution’s ReLiB stream has enabled research into the safe and efficient segregation and repurposing of cell components. The Government are also investing in two new interdisciplinary circular economy centres in this area as part of a wider £30 million investment, as mentioned by the noble Baroness, Lady Walmsley.
I apologise; I see that I am running out of time. I had a few other responses to noble Lords but I will put those in writing. I thank the Science and Technology Committee once again for its significant efforts in raising awareness and progressing our understanding on this important topic. Your Lordships have my commitment that the Government will continue to pay close attention to the many excellent points that have been raised in this debate, and I thank noble Lords for their attention.
Lord Patel (CB)
My Lords, I thank the Minister most sincerely for answering many of the questions raised, or at least for making an attempt to answer them. As he said, many remain unanswered, and I am glad that he has committed to writing to noble Lords.
When I listened to his answers, I came to the conclusion that everything the Government are doing is fantastic, and we should be world leaders in battery technology, battery science and so on. However, in reality it turns out that we are not. The question that I raised in the first place remains. The Government are doing something, but is it enough? I am glad that the Minister said he took note of the points raised and that the Government will think about it and see what action needs to be taken.
Having heard that response from the Minister, I hope the committee might in due course look at this again in a quick report to ask questions about how much is being done. For today, I thank all noble Lords who have taken part. It has been a very interesting and committed debate on the part of all noble Lords. I thank the Minister again in particular.
Young People: Skills (Youth Unemployment Committee Report)
(2 years ago)
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Lord Shipley
That the Grand Committee takes note of the Report from the Youth Unemployment Committee Skills for every young person (HL Paper 98), Session 2021-22.
Lord Shipley (LD)
My Lords, I am very pleased to speak to the report of the Youth Unemployment Committee, Skills for Every Young Person. It is some 210 pages long and contains 88 conclusions and recommendations. I thank the staff who supported the committee: Simon Keal, our clerk, Francesca Crossley, our policy analyst, and Abdullah Ahmad, our operations officer. I also thank our specialist advisers, Dr Kathleen Henehan from the Resolution Foundation and Oliver Newton from the Edge Foundation.
I thank the noble Lord, Lord Baker, for enabling the Youth Unemployment Committee to be created at a time when there were serious worries about the impact of Covid on young people. There are long-term consequences of Covid, which are affecting many young people. I thank the members of the committee for their work over nine months during the Covid lockdown, when we met mostly by Zoom and Teams. I thank those speaking today, who will add their own experiences and insight to our work during this debate.
On behalf of the committee, I thank all the many people who submitted evidence to us or attended as witnesses: all the school, academy and college leaders, employers, charities, academics and, of course, young people themselves. It was of fundamental importance to us to listen directly to young people. Thanks must go to the noble Baroness, Lady Newlove, for facilitating our listening engagement with young people in Bolton and south-east Lancashire, to the right reverend Prelate the Bishop of Derby for facilitating a similar listening engagement in the east Midlands and to the noble Lord, Lord Woolley of Woodford, for facilitating our listening engagement in London with young people from ethnic-minority backgrounds. This approach proved highly rewarding and played a major part in developing the thinking of the committee.
There has been a long delay of a year in holding this debate, but it has the advantage of being held with a new set of Ministers at the helm. The Prime Minister has put education at the centre of unlocking growth, and it is reported that the Government will attempt to boost growth through investment in training and end the long-standing bias towards academic rather than technical qualifications. Skills are the bedrock of a thriving labour market. We heard again and again that there is a serious mismatch between the skills young people develop in school and college today and those that the future economy will need. This is caused by two key issues.
First, the developing economy has new sectors and jobs—in the green sector and the digital sector, where there is growth in cyber and artificial intelligence. At the same time, existing sectors such as social care are struggling to fill posts. To tackle this, we recommended that the Government develop a long-term national plan for anticipating and addressing skills mismatches.
Secondly, we heard from employers that when students leave school, many do not have the skills they need to find work. The school system is characterised by a national curriculum focused on academic subjects and written exams. This is not helping young people develop or showcase other skills that we need, such as teamwork, communication, creativity or problem solving. Equally, although careers guidance has improved, it is still not being taught uniformly and is not being supported by quality work experience provision. This means that too many young people are not aware of the skills they need to get into a new, growing sector.
Therefore, we recommended that the Government must recalibrate the compulsory components of the national curriculum and performance measures, putting skills at their heart. Digital and creative subjects such as design and technology are seen as less important than other subjects in the Government’s EBacc measure, while essential skills such as oracy, teamwork, and problem solving are not being tested because of the focus on the academic. I was very disappointed to read in the press last week of suggestions that design and technology may continue to decline because of the poor funding situation of many schools. This must be avoided.
We were disappointed by the Government’s response to our report, in which they argued that they do not see a need for curriculum reform. I am confident that the committee is right and that what we have said reflects the general view outside Whitehall and Westminster.
As an example, the president of the Royal Society in a letter to the Times on 28 October said:
“While preparing people for the workplace is not the sole aim of education, if it is failing to do this, it is failing young people and the economy. For too long we have allowed academic snobbery to make vocational education the poor relation and laughed off a lack of maths skills.”
This strikes a chord with our recommendations 82 to 87 on the national curriculum.
On a more positive note, we were pleased to hear that the Government will produce better, more accessible information on skills. The publication of data from the Skills and Productivity Board and the creation of a new Unit for Future Skills is welcome. We still believe that more should be done to facilitate careers guidance in primary schools; it is where individual career decisions start to be made.
While youth unemployment has fallen from its pandemic peak, it remains higher than in several comparable global economies. Although we have seen a fall in the number of young people not in employment, education or training since mid-2020, the recent estimate of over 600,000 young people in this category is simply far too high at a time when we have 500,000 job vacancies across the United Kingdom. This problem is exacerbated by past and present Governments under- funding and undervaluing further education in comparison with the university route, as well as there not being enough apprenticeship opportunities for young people who want to do them, and the apprenticeship levy not being focused primarily on young people.
Young people who are disadvantaged are still not receiving the support that they need—we talk in chapter 6 of the issues that the lack of support creates for those groups. We said that to tackle disadvantage as a barrier to work, we must ensure that all young people—especially the most disadvantaged, including those with additional needs, those in care and those in custody—have access to quality careers advice from primary school age onwards and a strong work experience offer. It became clear to us that more disability employment advisers are needed.
We called for a new education and workplace race equality strategy that tackles discrimination and unequal opportunities. I draw particular attention to recommendations 59 and 60 about young people from ethnic minority backgrounds, who still face barriers. That strategy would focus on collecting data and proposing targeted support programmes. I know that the Government said that they did not feel such a race equality strategy was necessary at this time; nevertheless, they committed to monitoring our recommendations and addressing any concerns. I strongly hope that they will do so.
We heard a lot of evidence about progression routes needing to be available so that those starting a course know what they should move on to do next. The biggest example of that was Kickstart, where there was no clear progression route following taking part in the course. We were told that we needed better promotion of careers and apprenticeships in schools and that there was a need for rigorous enforcement of the Baker clause to ensure parity of esteem for technical and academic routes. We were told, too, that there was a need for a careers guidance guarantee that would enable every disadvantaged young person to have access to one-to-one careers guidance, as well as a need for a constant review of the real impact of careers hubs and the Careers & Enterprise Company on individual schools and colleges and a continuous review of T-levels to ensure their availability in all parts of the country. We were impressed by the potential for the use of the UCAS system to include apprenticeships using local platforms. We thought that there was a need for a lifetime skills guarantee to apply to qualifications below level 3, and also concluded that we had to strengthen digital skills at all levels.
That takes me on to say that I welcome the appointment of Gillian Keegan MP as Secretary of State for Education. She gave evidence to our committee on 13 July 2021, when she was Minister for Apprenticeships and Skills at the Department for Education. She said that she was the first apprentice who had held that role and that she was passionate about apprenticeships because it was a life-changing experience for her. She also said:
“There has always been a disconnect between the education system and employers. That has possibly accelerated in the last 20 years or so, as we have really entered the digital age … That is why the careers hubs are important, because that is working with real businesses.”
Reading that again, and the transcript of what she said to our committee 18 months ago, it seems that there is now huge potential for a change of government direction towards technical education and apprenticeships.
Finally, I draw attention to recent evidence on apprenticeships from the Learning and Work Institute. What I am about to say came in an email from the institute, so these are its words: “Research on apprenticeship outcomes shows that nearly half—47%—of the 2,500 apprentices surveyed dropped out of the training before completion. A lack of support from apprentice employers—37%—or tutor—26%—was the most common reason for non-completion, but reasons also included poor programme organisation—32%—or teaching quality—24%. Those who did not complete their apprenticeships were much less likely to find a permanent job or promotion. It is particularly important that young people at risk of becoming NEET have access to high quality apprenticeships, and steps are taken to address non-completion.” I guess the Minister will be aware of these figures, but they are important to consider so that we understand what action can be taken to alleviate the concerns that have been raised. The Learning and Work Institute also draws attention to the fact that the number of people starting apprenticeships is declining, mirroring not a decline in interest but rather in opportunities available.
Last but not least, the committee called for a new, independent young people’s commissioner to be the voice of our young people. We noted split responsibilities across several ministerial portfolios for the support of young people. We concluded that this split was unhelpful, that it is essential to avoid silos and silo working and that a young people’s commissioner would focus attention on the interests of young people directly in making representations to the Government. I hope that further thought will be given to that because there are other commissioners for other age groups, and it seems that the focused attention of a commission on young people specifically would help to bridge some of the gaps that we identified between Ministers and departments in Whitehall.
I want to borrow something that my noble friend Lord Storey said in one of our meetings. How will we know when we have succeeded with this task of encouraging apprenticeships and greater technical education? We will know when secondary schools have banners on their railings that do not talk just of their Ofsted rating or the number of GCSEs and A-levels they have secured but will also tell the public how many apprenticeships they have produced for young people. I beg to move.
Lord Baker of Dorking (Con)
My Lords, first, I congratulate the noble Lord, Lord Shipley, on being the brilliant chair of this committee. We heard a huge volume of evidence, and for him to marshal it and for us to hear and discuss it was quite remarkable.
This is a radical report, and I do not expect the Government to welcome it at all. I cannot anticipate what the Minister is going to say, but the attitude of the Department for Education to all change is now totally negative. In the last year, there have been six major reports, of which this is one. The first was from the High Mistress of St Paul’s School a year ago. It was a huge survey of 800 people, including from the public sector. She came to the conclusion that the curriculum was not fit for purpose, and nor were GCSEs. She was told—not by a Minister but by the Permanent Secretary at the department—“Forget it, we’re not going to change anything”.
A fortnight ago, we had a debate on the report from the Times Education Commission. The Minister made it quite clear that the Government were going to bin that as well. Again, the report recommended substantial changes in our curriculum. So I do not expect that the Minister tonight will accept any of the 88 recommendations that we have made—and certainly not the most important ones.
Some of the most important ones centre on the curriculum. The evidence we heard from industrialists, big and small, was that it is not suited for purpose because too many youngsters at 18 leave with no employability skills at all—none whatever. By “employability skills” they mean an experience of working on teams. That does not happen in the present curriculum. Experience of collaborative problem-solving does not happen in the present curriculum. Having really good communication skills—“oratory”, as it is called—is not taught in our present system, either. This was the absolutely overwhelming weight of evidence and, quite frankly, the Department for Education does not listen at all.
Nissan, one of the largest car manufacturers in our country, said that design technology should be a compulsory subject—but no chance at all. The Government over the last 12 years have presided over a decline in design technology of 80%—it is absolutely unbelievable. What is more, over the past 12 years they have cut technical education by 20%. They are not interested in it at all. The Department for Education is preoccupied solely with academic subjects.
We took a lot of evidence on data skills. The actual curriculum the Government are following is word for word what was published in 1904 in the Edwardian age: exactly the same subjects as 150 years ago. Well, the Minister might recall that 150 years ago, a man with a red flag would have to walk in front of a car. We have moved on from that now and, quite frankly, the Government should recognise that artificial intelligence is the gold rush of this century—and artificial intelligence is embedded in data skills. So will the Minister accept our recommendation that all primary schools should have coding clubs—all, not some? Every student should have the right to a computer—not just some but every single one.
When it comes to secondary education, does the Minister realise that, compared with 2016, 40% less computing is being taught in our schools? It really is extraordinary. We recommended that computing, which means not just coding but virtual reality, cybersecurity and artificial intelligence, should be taught from 11, as soon as possible. I do not expect she is going to accept that tonight, but it is in fact what we ought to do. This is the age in which we are living, and the department is digging in again and again.
The actual problem we have had is that, since 2010, we have been subjected to the theory of an American educator called Hirsch, who says that if you just give to those disadvantaged children academic subjects, they will flourish and expand and all the rest of it. Well, that has failed: we have been the test bed. There is no other country that has followed Hirsch and no state in America that has followed Hirsch, but we have been the test bed and the programme has failed. Today, there are as many disadvantaged students—300,000—as there were in 2010. There has been no real improvement whatever. So what is the result? We have job vacancies. Which department is responsible for job vacancies? It is the Department for Education, because it has not provided what industry and commerce need in the youngsters they are going to employ.
Therefore, we are on the edge of a major change, because the volume of opinion is now building up. The membership of our committee was not a group of eccentric amateurs; it included two ex-Secretaries of State, a former Director-General of the BBC, and the noble Lord, Lord Woolley, who is the greatest advocate in this country of improving the education of black, Asian and minority interest students.
Again, we had recommendations on this—we had recommendations on work experience, but the Government want to phase out work experience. They passed legislation in 2016 to try to restrict the number of people going on work experience from ages 14 to 16. This is so much against what is needed in our country.
This report is radical, and I was proud to be a member of the committee that produced it, but this is not just a single matter. A volume of opinion is now growing. I am very glad to see that the Labour Party is seriously going to consider fundamental educational reform. I can see noble Lords nodding. I hope that my party will also embrace that, and I will do everything I can to support it. We have to bring skills back into education, where they have not been for a very long time.
Are there grounds for hope? Yes, I think there are. The new Secretary of State for Education is the first since 1870 to have been an apprentice. I therefore think that she will be sympathetic to many of the proposals in this report. The Prime Minister, in a briefing from No. 10 to the Times newspaper, said that education was a silver bullet. I hope we might have some indication of the silver bullet tonight. I doubt that we will, but there we are.
Lord Baker of Dorking (Con)
I ask the noble Lord please not to worry about the time I am taking. He should just listen to what I am saying—he will learn something.
I hope that in addition, we will tonight have some evidence of what the silver bullet is—or will it just be a defence of the status quo? The status quo has failed on an absolutely massive scale. Youth unemployment is at 9%. By the way, when we, a committee looking into youth unemployment, asked the Minister and the senior civil servant who appeared before us what was the level of youth unemployment, neither of them knew. It is at 9% but in the depressed areas of our country, such as in Walsall, Stoke-on-Trent and Blyth, it is as high as 20%. I therefore hope that we will see a considerable change.
I conclude by saying that I was very interested to see that the Chancellor of the Exchequer in his speech last week has appointed an assistant, who I know very well, to be his adviser on education. That is clearly an indication that he will not expect very original ideas to emerge from the Department for Education. I wanted to end on a note of optimism, and that is as optimistic as I can be.
Lord Knight of Weymouth (Lab)
My Lords, it is always a pleasure to follow the noble Lord, Lord Baker, because in many ways he always allows me to act as good cop. I remind your Lordships of my educational interests in the register, and I very much endorse the thanks given to the noble Lord, Lord Shipley, his committee and to all the staff who worked on this excellent report.
Back in 2009—which these days is prehistory—I was appointed the Minister of State attending Cabinet for Education and Welfare Reform. That was the title, but it was clear that Gordon Brown as Prime Minister basically wanted me to be the Minister for youth unemployment. It was post crash and he, like many of us, was concerned about the scarring effect of long-term unemployment on young people. When I arrived, the Permanent Secretary said to me, “It is inevitable that youth unemployment will continue to rise. You’ve got to face up to the fact that those scarring effects and social problems are just going to happen.” I am happy to say that we managed to get youth unemployment down during the time I was there, from 664,000 to 625,000; it did not do us any good in the election, but there you go. That was thanks to the Future Jobs Fund, which was then imitated in a much paler form by Kickstart when the Covid crisis then hit. However, I will not get bogged down in the detail comparing them and why I think the Future Jobs Fund was a much better scheme.
The reason why I wanted to recall all that is because it was quite a culture shock going into that job, having been Schools Minister for three years. I had been trotting out the rhetoric about how brilliant all our schools were and what a great job we were doing, and then I saw and met the young people who were at the wrong end of the school system and had not been well served by it. As Schools Minister, I was the Minister who made being NEET technically illegal because I conceived of and took through the legislation to raise the participation age to 18. Indeed, that was a success statistically, in that we moved from 15% NEET down to 10% NEET in that time, but the reality for the minority who continue to be failed by our school system is pretty bleak. The noble Lord, Lord Baker, underscored that.
This report goes to the right things: the skills gap and the school curriculum. I agree with the noble Lord, Lord Baker, about the curriculum, the need for a much better, all-age careers service, fully staffed by proper professionals who can help people of every age, the need for FE funding and apprenticeships for young people in particular and the problem of Whitehall silos. When I was at DWP I was trying to work with the Skills Minister, who I got on really well with. We both wanted to join up the skills system and the unemployment support system, yet the silos of Whitehall frustrated us.
It is really important that the recommendations in this report are listened to by government, but I will use the remaining time I have to say that I also want to see a mindset change. The reason why we wanted to raise the participation age was to create a mindset change which said that it is intolerable that there are people not in education, employment or training at the ages of 16 to 19. My 11 year-old at home, who has just started year 7 this term, will leave statutory education in 2030. She will then probably have a working life of 50 to 60 years, so she will be in the labour market until something like 2080 or 2090. We have to think about whether, in the remainder of her secondary school experience that she has already started, we are preparing her for the way the world—her world—will change between now and 2090.
We have to think about the need for a greener economy and the sorts of green growth and investment that has just been talked about in the previous debate in this Room. We have to think about STEM skills, but also the craft skills for a retrofit economy, which in many ways is what we need in order to make existing resources go further.
AI machines will be doing much more of the work during the rest of this century, which means we need an education system that helps my daughter compete as a better human, not as a better machine. The danger of our current curriculum is that it is training our children to be machines that will be outcompeted by better machines. We need to be more human, more caring and more curious. We will have an ageing population during our lifetime which simply cannot afford to carry a large number of young people who become long-term unemployed and a drain on the welfare state.
We need to start from there—from a vision of what sort of world this century will create for the people who are currently in school—and work backwards. What will the adult skill system be like? Will it allow people to constantly retrain, change careers and have a proper love of learning and ability to self-direct their learning? What changes do we need in our higher and further education systems so that they work better together in all parts of the country, not just in those where the universities are currently located?
What are the qualification and curriculum needs? I recently went into an E-ACT school in Daventry with a motor vehicle workshop. I asked about the qualifications that are being studied, and none of them include a specification for hybrid cars. Yet, as we just heard in the previous debate, we will not be selling internal combustion engine cars by the time the kids working on those cars enter the labour market. It is shocking that we do not have a skill system that anticipates the future. It looks at what we might need now and the skills gaps now, and tries to fill those with qualifications, but that is inadequate. We need now to be looking to a much more dynamic, future-looking, whole-system change, so that we can urgently achieve the green growth and the much more human-centred society that this country, including my 11 year-old at home, is growing up into.
Lord Addington (LD)
My Lords, when I first decided to look at the report and speak on it, I was struck by the fact that many of us who had been looking at this field and at education had been agreeing with it for quite a long time. We had been agreeing with its general thrust that further education and technical skills have been seen as a second-class option by an education system that is dominated—I forget which noble Lord said this; it might have been the noble Lord, Lord Knight—by an objective to get everybody to Oxford—Cambridge will do. It is a process of acquiring exams, getting them rubber stamped and going through. This is the culture of our education system because it is led by graduates and that is where they want to go. We all know that what is normal is what we did.
We must shift culturally from that, but that it is very difficult to do. The Government inherited a situation where they are trying to do this, but they have discovered not only is that what we do not need for our economy because only a limited number of graduates are needed, especially at higher levels, but that certain people cannot join in with that process culturally or because of special educational needs. The Minister will have been expecting me to say that. When she answers, will she tell us when we will finally get the Government’s response? Last time, she said that it would be December—that is next week. Will it be next week? Will it be before Christmas? That will colour quite a lot of what we are saying because large sections of those who are failing and cannot get into certain universities are in the special educational needs categories or they are factors in their personal cocktail of circumstances which often hold them back from succeeding. If they cannot pass those GCSEs by which we are so keen on defining the success of a school, how are we going to make sure that they carry on? The incentive in the past two years to offload has been absolutely there, and that is why we have such a high number of children who are not in school. If it is not the only reason, it is a factor.
Something else I gathered from this report and by talking to other people is that a key skill is probably not passing that English exam but using a computer efficiently. I remind the Committee of my declared interests in dyslexia and technology. Schools also allow you, bizarrely, to nullify some of those disadvantages—say, if you have dyslexia—of not acquiring those skills that most people have of being able to read and write quite easily. It is actually so commonly available now that there is a shift towards teaching people to use a standard package of technology, rather than putting additional technology on, but you have to use it and you have to get the classroom to use it. It would be a way of allowing more people to acquire a new key set of skills.
Everybody seems to agree on the committee—it is in the committee’s findings—on the fact that that is your new key set of skills. But if you are not going to encourage people to do this by saying that this is what you should be doing now, encouraging them to go and learn other skills, and then insisting that you have to get that 1960s grammar school-type approach to education—that you have to have X number of ticks to get through—you are going to continue to make it difficult to get these groups in, denying the initial stage of entrance to these processes. I have a long history when it comes to apprenticeships. If you are going to allow them in, even if you allow them to take the course, they cannot finish it. I know that there have been changes, some of which I helped to initiate, a long time ago, but I have heard that it is more observed in the breach than in the practice. But that is a battle for another day.
If the Government are not going to accept that radical change needs to take place in our exam system, we will continue to get the same results. We will continue to get an Education Department that is constantly talking about people retaking courses—people who are not achieving and who have not achieved at school—in something that most people do fairly easily. If we are going to carry on doing this, we are not allowing them to go on to further training, and we are effectively writing them off—that is, if they have not already taken themselves away. These factors are accentuated by their background: if they come from a family where everybody has failed exams, they will say, “I’m not going to be different from my folks”, and they will continue to do it.
How do we break this pattern? The only way in which we will start to dent this outside the curriculum is to make sure that there is better careers advice, which gets to the homes of these pupils. If you manage to sell it to the parents, the child may listen. How we do that interaction with the parents will always be difficult, but that is the key structure. It is about making sure that any child says something to the parents and the parents say, “Yes, we’ll buy in”. At the moment, careers advice is that you should work terribly hard, get on with the process and get your degree—but we have excluded hundreds of thousands of people before you have started, because it is not something that they are attuned to. If we make that path more open, which means far more emphasis on further education than we have now, we stand a chance of affecting it.
We need a huge cultural shift, as well as a technical one. Unless we start to embrace that with an aggressive attitude, we will never get there—because the status quo is the status quo because of the fact that people do not like to change.
Viscount Waverley (CB)
My Lords, the noble Lord, Lord Baker, called for bringing skills back into education, and I shall attempt to present a bridge to that end. Before doing so, I fully sympathise with the frustration of the noble Lord, Lord Knight, with silos—a culture that needs urgent dismantling. Being holistic is the key word for going forward, generally through everything in life and particularly in relation to the UK’s management of itself.
I have happily slept-walked into a sector of critical importance to the United Kingdom—namely, the future of the UK’s freight and logistics, for which I serve as co-chair to the parliamentary group. This is to be a strategic evaluation by region, then analysed nationally by modal, by non-conflicted persons in an evaluation for decades to come. Skills and training are crucial, so I welcome this opportunity to draw attention to the opportunity that the sector presents as a career path for the youth of today.
As background, logistics is a large and growing industry across the UK, employing 2.56 million people, either directly or indirectly, accounting for 8% of the workforce. Top employers, of which 11 are pure logistics companies, include world-class players such as DHL Express, Wincanton and CEVA Logistics. Employment has nearly doubled since 2012, outpacing the rest of the UK economy and accounting for 8% of the workforce, contributing £139 billion gross value to the UK economy. A helpful independent report by Frontier Economics, supported by Logistics UK, has looked at the economic, social and environmental impact of the logistics industry, with findings based on a combination of quantitative and qualitative analysis.
A recent school career leaders presentation has challenged current perceptions about logistics roles as presenting an open career structure with the least number of managers with degrees. Some 30% of all roles advertised in the south-east Midlands are for logistics roles, of which one-third are above £30,000, well above the national average. A range of growth forecasts shows that we could be looking at creating 25,000 new jobs over the next 15 to 20 years in the warehousing sector alone.
All this brings me full circle to the report before us this afternoon. Logistics provides opportunities for people who may not otherwise be in work. An independent survey indicates that 20% of people currently in logistics were previously unemployed, of whom one in four was long-term unemployed. Almost two-thirds—62%—of logistics managers do not have a university degree.
There is, however, a call for reform of the apprenticeship levy so that funds can be spent on alternative training and qualifications. Issues raised as barriers to using apprenticeships typically include the 12-month minimum duration and the 20% off-the-job training requirement—in other words, one day per week spent training. It is suggested that they do not get as much out of the levy as they put in, which is supported by the fact that, during the financial year 2019-20, only 15% of apprenticeship levy-paying employers fully utilised the funds available to them. A skills levy, as opposed to an apprenticeship levy, would help to bridge the gap between shortages and skill acquisition. The apprenticeship levy—although originally hailed as a mechanism to link young people wanting a solid start to their career with businesses that needed next-generation knowledge, skills, and behaviours—has not reached the desired target audience.
It should be underlined that truck drivers and other vehicle operators currently struggle with the rigidity of the apprenticeship framework and could recruit and train more people more quickly if it were reformed into a skills levy. As an example, there is a heavy goods vehicle apprenticeship standard; it takes 14 months to complete, but the drivers have their licences in six months. Most employers continue to train their own drivers to their specific standards and work practices long after they have passed their tests, meaning that the continued requirement for individuals to attend college once a week is rather redundant.
While advanced and higher-level apprenticeships are important in professional development planning and for retention, with young people having an appetite to learn and businesses having a need for talent, the pipeline that joins them seems at present not to be sufficiently accessible for logistics and transport. Simplifying offerings and making more of portable modules would go some way to rectify those challenges. Thinking creatively, outside of formal qualifications, could lead to accredited modular learning that could then, if desired, lead to a qualification later. This is particularly important when considering the lean margins of the sector. If qualifications are to be company funded outside the levy for smaller organisations, a lack of return on investment could cause setbacks to future investment.
The propensity to put qualifications on a pedestal over on-the-job learning needs to be revisited to prevent the alienation of those looking to progress. Accredited training is a viable option as an alternative to more traditional qualifications for immediate return on investment to support those who want to pursue a career in the transport sector with businesses that desperately need those skills in their workforce. The Assured Skills Academies in Northern Ireland provide an interesting blueprint.
Generation Logistics is initially a 12-month programme of engagement and promotional activities that aims to bring the industry together, shift perceptions and encourage the next generation of logistics workers to engage with available opportunities. Generation Logistics’ campaigns are centred around increasing the diversity of the sector, ensuring that, when people across all demographics view Generation Logistics material, they see themselves reflected.
Addressing the aspiration gap is also key, profiling the managerial jobs that many will be unaware exist in the sector and so dismiss a career in logistics as not being one that matches their ambitions. Promoting the diversity of opportunities should support inclusion, noting the range of opportunities that are available that focus on certain knowledge, skills and behaviours, not on background, race or gender.
There is a danger, when considering the promotion of the profession, that only the more attractive side is shown to target audiences: robotics, driverless technology and more. However, it is critical to strike a balance to ensure that the sector not only recruits, but retains, new talent. Demystifying the sector, in addition to commonly held myth, is perhaps an attraction strategy better rooted in the everyday roles the sector is crying out to fill. Re-education, such as promoting the benefits of shift work as flexible, rather than undesirable, makes for interesting campaigns for both young people and career changers alike.
To change this perception, those working in logistics, transport and supply chain operations must be positioned as practitioners and professionals against benchmarked standards. Young people cannot be what they cannot see, and logistics is the very definition of a hidden industry, operating behind closed doors and yet keeping the United Kingdom moving. A national campaign to promote the logistics profession to underrepresented groups is being spearheaded by Generation Logistics, supported by the Department for Transport, and is aiming to address the negative perceptions of the sector and promote the availability of attractive, fulfilling jobs at all levels.
Lord Harlech (Con)
My Lords, before we continue, I remind your Lordships that the advisory Back-Bench speaking time is seven minutes. It says “advisory” but it is actually mandated.
Baroness Uddin (Non-Afl)
My Lords, I am someone who often goes over and tests the patience of the House. I thank the noble Lord and the members of the committee for enabling us to participate in this discussion. It is an incredible report and everywhere I touched, I wanted to read more, but I confess that I have not finished it. I want to refrain from detailing statistics as noble Lords are all too conversant about the level of disparities in Newham, Barking and Dagenham, Brent and, indeed, Tower Hamlets, which are the areas I want to concentrate on, as a result of the significant effect of the lack of opportunities for young people to be meaningfully engaged in education, jobs and training,
I wish to raise two points particularly about Tower Hamlets and more generally on the impending explosion of emerging technologies and our unpreparedness to ensure that a generation of young people profit from opportunities and to consider how we mitigate the gaps which are profoundly highlighted in this report. Tower Hamlets’ young people are encircled within Canary Wharf, Broadgate and the City of London, where the majority of employees commute long distances for work. For the citizens of places such as Tower Hamlets, employment prospects remain at the periphery of hospitality or the food and catering sector. Even graduates are stacking shelves in the retail industry. I urge urgent action to address the skills shortage. How can IT and technical education be intensified in schools, colleges and universities to meet the imminent demand? What assessment have the Government made of the number of skilled graduates employed in the retail sector and the evident overrepresentation of graduates employed in basic positions on the floor and at checkouts? Do we know what the barriers are that prevent their progress to management? What action is being taken to ensure that employers are keeping their commitment to create local jobs and that pathways are in place for graduates to retrain and transfer their skills to meet employers’ needs in, for instance, data management, automation, digital technology and related sectors?
In my long-standing community experience, 30, 20 and 10 years ago employers used to claim that our kids could not speak good English or were not educated to high standards. This rationale is no longer valid, so why do so many large employers continue not to reflect the borough’s population? In financial, health and education institutions, visible representation remains unequal. School, university, health and local authority leadership does not reflect the local highly educated, trained and fit population. What policy changes are required to address these unequal balances and disparities?
A dizzying array of government and think tank reports highlights the gaps and action required, so we cannot say we lack awareness or evidence. This report is a prime example. Walking in any part of Tower Hamlets, night or day, indicates that countless young people do not have sufficient options for activities outside the home, school or college, after a decade of government and local systemic dismantling of youth provision, career mentoring and leisure facilities. Not enough of our young people are gainfully engaged, employed, training or undertaking apprenticeships, and they lack access to adequate community facilities, sports and other services, resulting in devastating social and mental health consequences.
Incidentally, I welcome the latest Tower Hamlets initiative to reinstate the education maintenance allowance, which was summarily annulled by the previous administration, despite tangible effects on educational attainment in Tower Hamlets in that 10-year period. This is good news for young people who wish to pursue education and not feel the pressure to work. It is worth pointing out that this borough has a proud tradition and history of pioneering activism and visionary entrepreneurship, which is responsible for the curry industry, the gentrification of Canary Wharf, the hipness of Shoreditch and trendy Spitalfields Market, and a growing band of IT technology geeks setting up offices.
The immense physical changes to the area have not necessarily improved the lives of the majority, who live squashed between the many offices and residential blocks of highly prized buildings which look sideways to continuous deprivation, poverty and, crucially, young people’s inevitable cycle of lacking opportunities and, therefore, aspiration. This is the reality of the vast and significant population of families who can only look into the distance of so-called social mobility aspiration.
My proposition is simple: we know the issues for young people up and down our country. Tower Hamlets is no different from Cumbria or Cardiff, where there are unacceptable pockets of disparities regardless of the glaring fact that we are the sixth-largest economy in an ever-shrinking world where young people are aware and connected to others through emerging technologies. The revolution we see elsewhere may come to our shore if we do not create a pathway for their meaningful participation in our economy and empower their fullest potential.
PwC and McKinsey highlight the profound shift towards automation and its disconnect to the job markets. We need to address these gaps early in education and careers advice, as well as creating community services which provide support and mentor young people into the lucrative career opportunities that exist within the emerging technology and digital sectors.
Lately I have had the privilege of working with colleagues from across the House, considering the effect of emerging technology as the chair of the APPG on the Metaverse and Web 3.0. I have met significant numbers of stakeholders and leaders in this space. Again, we need to assert those opportunities and ensure that this space does not continue to be the purview of the elites. We must be prepared to assist the innovators to develop in this space, which includes the creative industries, fashion, AI, robotics, digital currency and so on.
There are new sectors that are also disenfranchising communities and not integrating, although I wish to highlight the Surrey Academy for Blockchain and Metaverse Applications and Durham University Business School, which both reach into the community. Both institutions are looking to work with local communities and schools in order to improve people’s understanding of the potential benefit of explaining a new career choice.
I come to my final point, with noble Lords’ indulgence. I know some fantastic local schools that are working in this field. I commend Miss Nina Morris-Evans, who brought a fantastic group of young people from Haverstock School in Camden to meet us at the APPG on Women and Work. I hope their experience will be a long-standing one and will profoundly impact their choice of careers.
Lord Watson of Invergowrie (Lab)
My Lords, we are indebted to the noble Lord, Lord Shipley, and the Youth Unemployment Committee for their endeavours, which have revealed much detail on the subject and resulted in a most comprehensive report. It is unfortunate that we have had to wait a full year for your Lordships to be able to debate its many positive recommendations.
The headline figures for youth unemployment have improved slightly since the report was published, but they still make grim reading. Some 634,000 young people aged 16 to 24 were economically inactive and not in full-time education in July to September this year. Youth unemployment overall may have gone down, but this has not affected the long-standing issue of disabled young people struggling to move successfully from education into work, with little impact on the disability employment gap.
I will dedicate much of my contribution to a major factor hindering a response to the problem of youth unemployment: too many young people are not receiving appropriate guidance at school on what a career can offer and what path needs to be followed to get there. The Careers and Enterprise Company has done much good work in extending the number of secondary schools delivering the Gatsby benchmarks, but I have long believed that careers education and guidance should begin in primary school. I was pleased to note that the committee reached the same conclusion.
Not nearly enough notice is taken by the DfE of the excellent and pioneering work done by a charitable organisation called Primary Futures. Developed with teachers, it connects primary schools with diverse workplace volunteers to take part in aspiration activities and talk with children about their jobs. Even allowing for the disproportionate number of 10 year-olds who want to be footballers, pop stars or YouTubers, many primary school children develop at least an outline of the career they would like to aim for. Why wait until they reach secondary school to begin that journey?
The Gatsby benchmarks were developed by Sir John Holman, whom I think the noble Lord, Lord Baker, referred to. Last year, the Government appointed him as a strategic adviser on careers guidance to Ministers in the DfE; this was necessary because one in five schools in England does not meet any of the eight Gatsby benchmarks. Only 37% of schools meet at least half of them; on average, schools meet just three. There is a serious lack of careers education, advice and guidance in schools, which disproportionately hits disadvantaged young people and those with disabilities.
The Minister will recall that, during the passage of the Skills and Post-16 Education Bill, I and other noble Lords sought to increase the Government’s proposal for the number of times schools should grant access to employers, further education colleges and others under the so-called Baker clause. She resisted that, as she did our proposal for Ofsted to withhold an “outstanding” grade from schools which restricted access to the provision of information on technical education routes. The Act has now given legal clout to provide that access. I very much hope that will see action taken against recalcitrant headteachers and MATs that think the law does not apply to them. This is about young people’s futures; they must be allowed as much diversity as possible in the options open to them.
The Minister and her officials will be aware of the report published last month by Labour’s council of skills advisers, led by my noble friend Lord Blunkett. The report called for a complete shake-up of the careers service, from school through to adult careers guidance, which should ensure that a trained careers leader is embedded in every school with responsibility for the career guidance programme, supported by and accountable to the senior leadership team. I heartily endorse that recommendation.
Apprenticeships are also a key aspect of tackling youth unemployment, because they can change lives. They also offer huge returns on investment for individuals and employers; the Centre for Social Justice showed in a 2020 report that for every £1 invested in level 3 apprenticeships, there is a £28 return to the wider economy. If used properly, they could help to plug the skills gaps our country is facing and support young people into work. The demand for apprenticeships from young people is at an all-time high, but the current apprenticeship levy system favours older learners—those over 25—by a ratio of two to one. Polling by the Centre for Social Justice found that one in six levy-paying employers uses levy funds to rebadge existing training or to accredit skills employees already have. That is not the purpose of the levy.
As recommended by the committee in its report, the Government should require employers to use the apprenticeship system to focus on young people. The incentives for employers to take on apprentices over the pandemic proved effective in boosting opportunities for young people because three-quarters of apprentices who started under this scheme were aged between 16 and 24. This scheme should be reintroduced and financed using some of the levy underspend. Since the levy was introduced in 2017, in excess of £2 billion has been returned to the Treasury. What is the point of that? A Labour Government would also use some of the unspent levy to fund other types of training, which would also benefit young people by offering modular courses and the development of functional skills to tackle key skills gaps.
I agree with the Social Market Foundation’s call for all apprenticeship opportunities to be listed on the UCAS system, perhaps by establishing and integrating local platforms. This would meet the often referenced but rarely implemented parity of esteem between the academic and technical routes open to young people. The lifetime skills guarantee is an important step towards restoring a funded entitlement for level 3 study. However, as many noble Lords emphasised during the debates on the skills Bill, there is no recognition of the value of qualifications below level 3 in creating progression pathways for young people, which is another issue highlighted in the committee report. A DfE report published last year revealed the return on investment of these qualifications and concluded that the net present value of qualifications below level 2 is higher than for level 3. Why have the Government ignored their own evidence?
In his Statement last week, the Chancellor said that
“Being pro-education is being pro-growth.”—[Official Report, Commons, 17/11/22; col. 849.]
Yet despite an extra £2.3 billion annually being announced for schools, there was no extra funding for further education. Colleges are vital providers of skills for young people entering work, yet FE funding compares extremely unfavourably with both university and school funding after a decade of funding cuts. The committee report calls for the Government to devise a new method of funding for FE, determined by student demand. I hope that the Minister will have something to say on that in her response.
Lord Aberdare (CB)
My Lords, this is an excellent and comprehensive report, on which I congratulate the noble Lord, Lord Shipley, and his committee. Coming in at the tail end of the innings, I will just comment on some specific issues that resonate with me within the report’s very broad coverage.
Careers education, information, advice and guidance, which are not all the same thing, have made much progress over recent years, not least thanks to the efforts of the Careers and Enterprise Company and the National Careers Service. However, as the report notes, there is still a long way to go to assure truly national coverage, consistency and quality. The report, like much policy discussion, tends to concentrate on the education aspect more than on information, advice and guidance. Yet IAG, delivered by qualified career development professionals, especially through personal guidance interviews, should be at the heart of high-quality careers provision. Such interviews at present are often too few or too short to be fully effective. They fall well short of the recommendation of 45 minutes. One of my consistent concerns relates to the lack of investment in developing the careers development workforce to meet this need.
Another issue is whether schools have the funds to attract and retain qualified careers staff. I hear increasing examples of schools, colleges and National Careers Service providers struggling to recruit and retain qualified careers advisers. What plans do the Government have to address this, perhaps through bursaries or other support to gain the necessary qualifications? Careers leaders in schools are not necessarily qualified to provide IAG, so there needs to be proper funding for professional careers advisers who are. Performance against the Gatsby benchmarks for good career guidance is currently assessed by schools themselves. What plans do the Government have to introduce more rigorous external assessment of outputs—for example, based on the Careers Development Institute’s career development framework or the careers impact review being piloted by the Careers and Enterprise Company, or maybe through a careers guidance guarantee, as suggested in the report?
The report also highlights the crucial importance of work experience. Young people need multiple workplace experiences covering a variety of different business sectors and activities—whether they be talks by employers or employees, workplace visits, job shadowing or actual placements—and these must be of high quality. Meeting the requirements of the Baker clause in its latest incarnation should be an absolute minimum, and needs to be enforced, including through Ofsted inspections. I think it is extraordinary that government programmes such as Kickstart do not include careers support as an integral part. The noble Lord, Lord Watson, mentioned Sir John Holman. His recommendations were promised for summer this year; can the Minister tell us when those will appear?
The report rightly includes a substantial chapter on apprenticeships, making recommendations which I fully support. However, I am a little uncomfortable with the suggestion that any employer receiving levy funding should spend at least two-thirds of it on young people under 25 starting apprenticeships at level 2 or 3. There is certainly a need to increase such apprenticeships for younger people, but upskilling and reskilling existing older workers is also vital, and in some sectors and businesses may be a higher priority and more realistically achievable than taking on new, younger employees. Having said that, I fully support increasing the flexibility of the levy and providing mechanisms to encourage employers, particularly SMEs, to take on more younger apprentices.
The new flexi-job apprenticeships scheme is a welcome idea to make it easier for SMEs to take on and support apprentices, and I was delighted to host the launch of the Evolve flexi-job apprenticeship agency in the Lords in July. However, I worry about whether this will prove attractive enough to overcome the barriers facing small firms considering offering apprenticeships, not just the costs but the management time and effort required to support and oversee young apprentices and the bureaucracy involved. It would be a pity if this scheme followed previous initiatives, such as apprenticeship training agencies and group training associations, in having only limited impact.
One topic not covered in the committee’s report is the role of independent training providers—ITPs—in addressing youth unemployment. They are mentioned only once, and only in a quotation from a government report. Having run an ITP providing employability skills training—including via the Future Jobs Fund, which the noble Lord, Lord Knight, mentioned—for young Londoners, many of them at risk of becoming NEET, I know how important ITPs can be in providing training for people who might otherwise fall through gaps in the system and in meeting specific employer training needs that are not covered by existing FE and other provision. ITPs provide the training for some 70% of all apprenticeships, yet the views and capabilities of ITPs are often underrepresented in policy relating to youth employment and skills. I welcome the fact that AELP—the Association of Employment and Learning Providers—representing ITPs, has recently joined the Association of Colleges and City and Guilds to set up a future skills coalition to promote investment in skills, including a much-needed national strategy to support local, inclusive growth. I hope the Minister will engage with this new body in developing relevant aspects of policy on skills and youth unemployment.
Once again I congratulate the committee on this important report, and the noble Lord, Lord Shipley, on his passionate introduction to today’s debate. I also commend the Government, and in particular the Minister, on their and her commitment to tackling youth unemployment. The report, with its 88 recommendations, presents a substantial challenge requiring a change of mindset, as we have heard. Meeting this challenge is vital not just for young people in or facing unemployment but for our overall national growth and well-being.
Lord Storey (LD)
My Lords, I declare my interest as a patron of Career Connect and a vice-president of the Local Government Association. It was a privilege to serve on this Select Committee, and I thank my noble friend Lord Shipley for his inclusive chairing and the Members and staff who contributed so much. The report is a must-read document, and anybody involved in education should read it.
If you happened to look at the Evening Standard on Monday, the banner headline on the front page said, “Bosses on Warpath over Foreign Staff”. The piece was about the shortage of skilled staff, particularly in the hospitality and retail sectors, and it was asking the Government to allow more overseas people to come to fill these vacancies. However, it added that the Immigration Minister, Robert Jenrick,
“slapped down those demands … and insisted that employers struggling to find staff should look to the ‘domestic workforce’”.
Really? Where are we going to find these people in the domestic market when we have not been skilling them for the last decade or more? You only have to look at Cumbria, where every restaurant and shop has signs for vacancies, and at the vacancies in the construction industry. We have allowed this to happen. Why has it happened?
Let us take our schools. When I was at school—dare I say it?—there was a grammar school system for those who were academic and technical schools for those wanted to learn skills. Now we have a system where we know that half of our pupils need an academic curriculum and half need a skills-based curriculum, but we forget about those on the skills-based curriculum—they are the failures. When we suddenly wake up and realise that we must have a curriculum for all young people, then Jenrick can make those demands. We are strangling creativity in our schools, while we see the independent school sector sail on in great success.
Unemployment rates and inactivity are higher for young people than the wider population. Generally, that is the case for all countries with limited work experience, barriers to some roles by age and qualifications, and limited work readiness. At the moment, youth unemployment is historically low, but not overall: 12 OECD countries have better rates than us. For example, in the latest statistics, the UK rate is 13.4% compared with, for example, the Netherlands at only 4.6%. Of course, we must ask what the impact of Covid has been. We did not see a large growth in youth unemployment, and we must credit the furlough scheme and Kickstart which helped reduce what would have been a large growth in the figures. Young people, though, were still more impacted as they predominate in the sectors worst hit—the retail and hospitality sectors—where they were not able to work from home. There was disruption to their exams and education, a lack of work experience and an impact on confidence and teamwork skills—and let us not forget that there are significantly higher rates of unemployment for young people from ethnic backgrounds, care leavers and those with special educational needs.
Job vacancies in the past 12 to 18 months have increased significantly, so why are there so many young people out of work? Over the last decade, the number of young people not in employment, education, and training and with mental health issues has tripled. There are a third fewer apprenticeship starts for under-19 year-olds than a decade ago, and still a third of young people leave school without five good GCSE passes. Work readiness is a major challenge because education, with its significant focus on academic attainment, is not preparing young people for work; as I said earlier, we need to have a curriculum which is broad-based and which recognises the importance of skills and learning.
Areas with the highest vacancy rates are in sectors that struggle to attract staff, which is due to low pay and challenging working conditions—the care sector is the prime example. The DWP has run a number of major programmes during the last two to three years, including Kickstart and the youth offer. How effective are those schemes and how can we make them better? Kickstart has been very positive in lowering youth unemployment during the pandemic, alongside the furlough scheme, with 162,000 young people starting Kickstart. There is strong evidence of intermediate labour market schemes working where they were implemented quickly and when they worked closely with the sector, but there were more challenges, not least bureaucracy—it took longer to approve vacancies and advertise them. This is no way for young people to search for suitable roles.
The need for technology is vital. The charity of which I am a patron took three months to have vacancies approved. In Written Questions I have constantly raised issues about 16 and 17 year-olds being eligible for Kickstart. Now the figures are available: 80% of this age group were excluded as they were not receiving universal credit, yet they were not in employment, education or training.
There were major regional disparities. There were one-third fewer placements in the north-east compared with London. This is not levelling up. The north-east should have double the number of placements of the south-east. The £1.6 billion that was spent on the scheme and the subsequent underspend on Kickstart should have been avoided.
Let me turn to the so-called work coaches. How effective are DWP work coaches at supporting young people? They are clearly committed, and work coaches provide an important service. The key challenge is their capacity to support young people. Building trust and rapport are key, along with soft skills, CVs and confidence building. Unfortunately, this is not something the majority of work coaches can provide in the time available. The majority have only five to 10 minutes per young person, which is filled largely with administration and conditionality, and they have a case load of 100 to 150 young people. Training tends to focus on administration and bureaucracy, not coaching.
It would be better to have charities and other organisations supporting young people. These organisations have the time, the expertise and the confidence to support young people. Experience in youth work and careers advice is vital. It takes, for example, two years to train a careers adviser. Can the Minister tell me, when it comes to the career coaches who work for the DWP, what is their qualification for the role? What are they required to have?
The noble Lord, Lord Shipley, mentioned apprenticeships and the research that showed the huge number of drop-outs. In a study of 2,500 apprentices, there was a 47% drop-out rate. That is quite concerning and worrying. I am also concerned, as I have already mentioned, by the fact that so many young people under the age of 20 are not taking up apprenticeships.
To end, we are told by the Office for Budget Responsibility that there will be a rise in unemployment in the coming year. Of course, that will disproportionately affect young people. It will have an effect on the industry and businesses that will not be able to fill the skills gap they desperately need to, and it will therefore have an effect on the growth of our economy.
I noted that the Minister for Work and Pensions—it seems that I am having a go at the DWP—sent out a letter in which she referred to “supporting the most vulnerable” through economic challenges. There is no mention in that letter of young people and how they will be supported, particularly if they are unemployed. I also noted that in the Chancellor’s so-called Statement there were extra resources for education. Sadly, there were no extra resources for further education or the skills sector.
I want to see a thriving economy, but you have a thriving economy only if you have the skill set and the people who are trained to fill those roles. We are letting our economy, our country and those young people down. I do have a hope for the future—that we have, as we have heard twice now, a Secretary of State who was an apprentice herself. More importantly, she comes from Liverpool.
Baroness Wilcox of Newport (Lab)
My Lords, I declare that I too am a vice-president of the Local Government Association. I thank the noble Lord, Lord Shipley, for leading the production of this report over a year ago and for his introduction, which provided a detailed summary of the report’s findings, together with positive suggestions for improvement. I restate my thanks to the noble Lord, Lord Baker, for the introduction in 1988 of those five Baker days, which helped to put professional development for teachers on a positive footing. I will try to give him some optimism tonight as I detail throughout my speech what a Labour Government intend to do about righting the wrongs so exposed by this excellent report.
This report makes for stark reading. At the time of publication last November, 12.6% of 16 to 24 year-olds were neither working nor in full-time study, and youth unemployment was at 11.7%. It is not much better today; now that the pandemic is abating, it is just under 10%. The committee’s report notes
“Unequal access to high quality careers guidance and a decline in work experience opportunities”,
and that careers guidance often starts too late to be useful. Noble Lords may remember my Front-Bench colleagues and I attempting to amend the skills Bill to ensure careers education from year 7, but we were unfortunately unable to persuade the Government of the merits of this, as so well detailed again this evening by my noble friend Lord Watson. Perhaps now they will think again.
Under the current system, employers can use the apprenticeship levy money only on apprenticeships. Some businesses have decided not to touch their levy money, while among those who spend it, employers report spending on average 50% to 60%, meaning that around £1 billion a year is going unspent in England. As a result, the CBI, Make UK, the British Retail Consortium and other business groups have highlighted a number of problems with the system and called for additional flexibility for business. The report that we are discussing today deals with this need for additional flexibility and calls for reform of the apprenticeship levy, such that any employer receiving funding from it is required to spend at least two-thirds of it on young people starting apprenticeships at levels 2 and 3 before the age of 25.
To begin to address these reforms that are so badly needed, my party has committed to a new growth and skills levy, which will give businesses the freedom to use currently unspent money, up to 50% of their total levy contributions, on non-apprenticeship training, with at least 50% reserved for apprenticeships. Clearly, stakeholders of all stripes are united: the levy is not working as it should for our young people.
Last month, my noble friend Lord Blunkett launched his report Learning and Skills for Economic Recovery, Social Cohesion and a More Equal Britain, which set out the scale of the transformation that we must deliver to equip Britain to succeed in the 21st century. Skills England, a new national skills taskforce, should be implemented to drive a national mission to ensure that young people and adults can access the training, reskilling and upskilling needed to thrive. We need to see similar focus and ambition from the Government on tackling youth unemployment, which is still above the G7 average.
My noble friend Lord Knight of Weymouth posed some far-reaching questions on the future needs of young people in education today, and how those needs have to be future-proofed. We must make much more use of developing the green economy and technology in developing young people’s skills. My noble friend Lord Watson referred to the careers aspects of this transformational report.
In taking this forward, Labour will be focused on how we deliver growth and enable people to take up good jobs in towns and cities across the UK. That is why Keir Starmer has already said that we will adopt my noble friend Lord Blunkett’s recommendation to introduce flexibility into the apprenticeship levy, flexibility that businesses are telling us they need to access the range of skills relevant to their workplaces. They will be able to spend money on short, modular courses, or pre-apprenticeship training, helping people to get new opportunities.
After more than a decade of failed Conservative policies, it could not be clearer that it is working people who will drive economic growth in this country, and we will focus on enabling people to succeed. As it stands, skills budgets are disparate, incredibly centralised and, more importantly, clearly not working. If we want young people to get on, we must devolve and combine these budgets, so decisions about training and upskilling are made closer to the people, businesses and communities who need them—those with real skin in the game. There is a tangible need for skills policies to be better aligned with regional economic policy and local labour markets, to deliver a more local, tailored approach to skills provision.
Analysis for the LGA by the Learning and Work Institute shows that the number of people improving their skills or finding work could increase by 15% if councils and combined authorities were better able to co-ordinate and bring together employment and skills provision across a place. Labour will merge the various education skills funding for adult streams, such as the shared prosperity fund and Multiply, with the existing adult education budget. This will then be devolved to combined authorities which, in collaboration with central government, will direct skills spending in their region and use their convening power to ensure that skills provision in their area is aligned with the local labour market, bringing together representatives from new local skills improvement partnerships, FE colleges, universities and local businesses. Skills England will co-ordinate the framework within which combined authorities deliver skills funding to make sure that local outcomes and local priorities are aligned with our industrial strategy and help us meet the challenges the country will face over the coming decades.
We will introduce a list of approved qualifications that businesses could spend their flexible levy money on, which will be developed by a new body in collaboration with businesses, unions and wider experts. We will include modular courses in priority areas which lie at the core of our industrial strategy, including digital and green skills, social care and childcare, which will boost training opportunities with a view to supporting national ambitions such as the transition to net zero. Functional skills and pre-apprenticeships training will help to tackle key skills, especially around basic digital skills. SMEs, which do not pay the levy, will be able to reclaim 95% of co-payments on approved courses in the same way.
Furthermore, Labour is committed to a complete review of the school curriculum, which was mentioned by noble Lords in the debate this evening. We would ensure that young people are equipped for the world and workplace of the future, not of the past. Among other things, we will look to reform the citizenship curriculum so it embeds practical life skills—looking at budgeting or understanding employment contracts—and digital competency, so that all young people gain the digital skills that they will need to thrive. We will ensure that this review is carried out by expert opinion because we want to give young people the best start in life and ensure that they leave our schools ready for the future.
I can go through the Government’s record on this issue to date—I am not normally a negative person, but apprenticeships have declined by almost 200,000, 11 million adults lack basic digital skills, and 9 million lack essential literacy or numeracy skills. There were 4 million fewer adults taking part in learning in 2020 compared with 2010.
What are we to do? A headmaster told me once, “Debbie, the biggest room in the world is the room for improvement.” He was right. He had it on a T-shirt which he liked to wear.
I end by quoting from the conclusion of my noble friend Lord Blunkett’s report:
“If there is not a step change which re-balances the economy, lifts the productivity and growth in regions across the nation to the levels seen in London and the South East, then the danger of stagflation will continue, the country will stagger on accepting mediocrity, gradually sliding further behind those countries who are determined to equip their nation for tomorrow’s world.”
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, the Government welcome the report Skills for Every Young Person and I thank the noble Lord, Lord Shipley, for securing this debate and for his skilful and inclusive chairing, as has been referred to several times. I thank all members of the committee who contributed to the report and all noble Lords who have spoken today with such clarity. I was also pleased to see that the Government’s successes were recognised in the report, such as the establishment of careers hubs and the decreased rate of those not in education, employment or training for 16 to 18 year-olds in particular, which is currently one of the lowest on record at 6.4%.
As the report acknowledges, young people were some of the hardest hit by the pandemic, but I am pleased to say that through the historic levels of support, which your Lordships have acknowledged tonight, provided through the Government’s plan for jobs package, including programmes focusing on young people, we have seen a strong recovery.
A number of the report’s recommendations and of the comments from your Lordships tonight relate to school curriculums, so I will begin there. Every state-funded school must offer an ambitious curriculum that must be balanced and broadly based, promote the spiritual, moral, cultural, mental and physical development of pupils and prepare them for wide-ranging experiences of life. I did not recognise some of the descriptions of the curriculum that your Lordships shared tonight. The curriculum currently encompasses both knowledge and skills, and the published programmes of study for national curriculum subjects demonstrate how knowledge and skills are intertwined. A very large body of evidence shows that fluency of knowledge acts as the building block for the development of skills.
Yours Lordships’ report recommends embedding digital skills within the national curriculum, so it might be worth mentioning here that that computing is a statutory subject within the national curriculum across key stages 1 to 4. There was a 16% increase in the number of students taking computer science in 2022. It was the second-fastest growth rate in STEM subjects after design and technology so, with respect, I do not recognise the description by my noble friend that there has been no innovation since the Edwardian curriculum. I am not aware of Edwardians studying computer science or design and technology.
The noble Lord, Lord Shipley, questioned whether design and technology is seen as important as other subjects on the curriculum. As the noble Lord knows, all state-maintained schools must teach DT to pupils between the ages of five and 14, that is in key stages 1 to 3. There is also a statutory entitlement for every pupil in key stage 4 to take DT if they want to, and the new Ofsted inspection arrangements place renewed focus on that broad, balanced and ambitious curriculum. We are also working very closely with a number of organisations, including the James Dyson Foundation, the Design and Technology Association and the Royal Academy of Engineering, to make sure that the curriculum is up to date and gives the knowledge and skills that employers want.
I turn to careers guidance, which was highlighted by the noble Lords, Lord Watson of Invergowrie, Lord Aberdare and Lord Shipley, as well as other noble Lords. We know that there is huge value in good careers guidance in terms of nurturing aspiration and ambition, and your Lordships rightly focused on the Gatsby benchmarks in your report. To give one example of their impact, evidence suggests that the proportion of post-16 students who are not in employment, education or training fell by 20.1% in the most disadvantaged quarter of schools since they adopted the benchmarks, and 90% of schools and colleges are currently part of a careers hub, which is accelerating the quality of careers provision. We are seeing rapid improvements in hubs and disadvantaged areas are among the best performers.
The noble Baroness, Lady Wilcox, and the noble Lords, Lord Watson and Lord Storey, raised the important subject of careers education in primary school. We recognise the value of supporting primary schools to help children explore the world of work, and careers provision is embedded in the key stage 2 citizenship curriculum. Thanks to the Careers and Enterprise Company, we have also provided all primary schools with resources to help pupils explore the world of work and, as the noble Lords who joined me in debating the skills Bill will remember, we have allocated £2.6 million over the current spending review period to bring new programmes to support careers education in primary schools in the 55 education investment areas.
The noble Lords, Lord Shipley and Lord Aberdare, talked about a duty for young people to receive work experience. We absolutely agree about the importance of work experience, as is very visible in the whole approach we have taken to T-levels. A lot of work is going on in this area. There are now 400 cornerstone employers bringing together business effort and engagement with local schools and colleges and increasing the number of employer encounters for young people. We have more than 3,500 business professionals working as enterprise advisers with schools and colleges to develop their career strategies and plans for engaging with employers. If I may, I will write to the noble Lord, Lord Watson, on the Gatsby benchmarks and go through the numbers. I fear I may be writing a long letter at the end of this debate, as I fear I will not have a chance to do justice to all the points raised.
The noble Lords, Lord Knight and Lord Addington, made a really important point about the need for a culture change. The Government can do their bit but, as the noble Lord, Lord Addington, said, parents and employers also need to play a part. We continue with our ambition to achieve equality of esteem between academic and technical routes. That will depend on the quality of the offer and on breaking down barriers between further and higher education.
The report made a number of references to bringing funding for further education more in line with that for higher education, so I hope noble Lords will be encouraged that from 2023-24 higher technical qualification student finance will be brought on a par with degrees. This is just one step, along with the lifelong loan entitlement and other reforms this Government are bringing in.
The noble Baroness, Lady Wilcox, described a top-down, soviet model of policy in this area. I think she referred to local skills improvement partnerships. I hope she will acknowledge that they are an important positive devolution of responsibility in making sure that we get the best possible interface with local areas.
As a Government, we are delighted that T-levels got off to a great start with the first cohort of students completing their courses this year with an impressive 92% pass rate. Your Lordships will be aware that every T-level includes important modules on digital skills. On the T-level transition programme, we are very clear that we need to support young people who might need a bit more help to access the programme and to ensure that that ladder of opportunity leads to higher technical qualifications.
The noble Baroness, Lady Wilcox, talked about what Labour would do in terms of a range of short courses and flexible options. I thought it sounded remarkably similar to the short courses and flexible options that we have been providing. The noble Viscount, Lord Waverley, and the noble Lord, Lord Knight, touched on this. We have skills boot camps delivering flexible training for new skills in green construction, renewable energy, protection of natural resources and the transport sector, including, I hope the noble Viscount will be pleased to hear, £34 million so that 11,000 adults have been able to train as HGV drivers to meet some of the gaps there. In terms of green transport skills, I was sorry to hear about the noble Lord’s visit; I went to see a college recently which was very much focused on electric vehicles, so maybe this is just in transition.
Obviously, apprenticeships need no introduction to the House. The report made several recommendations for widening the support for apprentices under the age of 25. Currently, 53% of apprenticeship starts are by young people under this age—I was not sure that I recognised the figures that the noble Lord, Lord Watson, cited. But we want to support even more young people to realise the benefits of apprenticeships; several references were made in the debate to my right honourable friend the Secretary of State and her remarkable career starting as an apprentice. Noble Lords will also recognise the voice of my honourable friend the Minister for Skills, who formerly was chair of the Education Select Committee and has been a passionate advocate in this area. So there is no lack of enthusiasm in the department.
One of our measures is a new career starter apprenticeship campaign. We are trying to showcase apprenticeships suitable for those leaving full-time education. We know, too, that there is huge demand for degree-level apprenticeships; we are seeing year-on-year growth of apprenticeships at levels 6 and 7, and we are enabling higher education institutions to grow their delivery through the strategic priorities grant.
The noble Lords, Lord Shipley and Lord Storey, made the valid point about the apprenticeship completion rate, which we are very focused on. We are aiming to reach a 67% achievement rate on apprenticeship standards by the end of the 2024-25 academic year, and we have a programme of actions to make that a reality in terms of investing in a new development programme for the provider workforce, offering targeted support for employees and ensuring that apprentices get the best information, support and advice before and during the programme. I think that the noble Lord, Lord Shipley, cited the main reason. How many times can I hit this microphone? It is every time I turn the page. I apologise to your Lordships.
The noble Lord, Lord Watson, suggested that levy funds should be ring-fenced for young people and the noble Lord, Lord Aberdare, made the case for the need to keep upskilling and reskilling our existing workforce. Clearly, our ambition is to offer opportunities in both areas.
I thank the noble Lord, Lord Shipley, for recognising the work that we have done on the Unit for Future Skills. I remember arriving in the department on almost my first day, sitting down with the Skills Minister and asking for the data on how we join this up—so I am personally delighted to see that we have taken this area forward. The unit is very ambitious about improving the quality and availability of data on skills and jobs, and we are making fantastic progress on that already.
I turn to green skills and I hope that the daughter of the noble Lord, Lord Knight, will have an amazing career ahead of her—I am sure she will. I was very lucky to attend the COP 27 summit, really making the case for the importance of education in our sustainability agenda. We are working domestically but also, importantly, internationally, on the whole green skills agenda. Clearly, there will be global competition for green skills. We will deliver the first ever international green skills conference next year, and we are working with the further and higher education sectors, and with young people. We have been fantastically supported by the young people’s panel, industry and policymakers to deliver a conference that will really showcase the best of green skills learning and training opportunities and highlight green career paths and enhanced international partnerships. We have a very ambitious strategy on this in the department and, of course, many of our T-levels and other qualifications will underpin skills in this sector. I genuinely believe—not just for the daughter of the noble Lord, Lord Knight, but for all young people—that the scale of opportunity in an area that young people care so passionately about is really fantastic, so I hope that young people will leave equipped with the skills that they need and also with the hope that they can use them.
The noble Lord, Lord Storey, questioned the impact of the Kickstart scheme. Since the launch in September 2020, over 160,000 Kickstart jobs were started by young people. Now that the scheme has closed, we are evaluating and learning from it. We built on Kickstart’s success to influence the Way to Work campaign, where we helped over 500,000 job-ready claimants, including young people, into work between January and June this year. The campaign provides claimants with more time with their work coaches and more nurtured connections with local employers to improve their employability. Through the Youth Offer, we are helping thousands of eligible 16 to 24 year-olds from all backgrounds to overcome the barriers and find work. It offers individually tailored work coach support.
The noble Lord asked about the qualifications of work coaches, who are part of the workforce. They are offered a tailored learning and development programme, so they have skills and knowledge, but also technical knowledge of the benefits to coaching, and they are encouraged to signpost customers who would benefit from expert careers advice to the National Careers Service.
Lord Storey (LD)
I presume that is not a formal qualification but an in-house requirement.
Baroness Barran (Con)
That is correct. That is not to say that some of them do not have formal qualifications, but they receive additional support.
The noble Baroness, Lady Uddin, highlighted some powerful examples of children from minority communities, particularly in Tower Hamlets, and the barriers they face. I do not have the detailed data on the boroughs that she referred to, but 24% of those currently engaged in further education and skills education come from diverse backgrounds. We have an apprenticeship diversity champions network, which promotes diversity to employers and encourages people from BAME communities to consider apprenticeships. We have seen a significant rise in apprenticeship starts from those communities, and of course the noble Baroness will be aware that there has been a significant rise since 2010 in the number of 18 year-olds from ethnic minority backgrounds going to university, from 32% to 50%.
A number of noble Lords asked about funding for further education and skills in the recent Autumn Statement. I remind your Lordships that the Government have introduced major structural reforms, investing £3.8 billion in skills over the life of this Parliament.
In closing, we are rightly proud of our successes, and we absolutely recognise that some young people continue to face additional barriers to employment, including those from ethnic minority communities and those with special educational needs and disabilities. The reforms and measures I have outlined are about every young person fulfilling their potential, as well as equipping young people for the future workforce. They aim to give young people the opportunity to progress, whatever their choices and wherever they live. They are about better prospects for disadvantaged young people, because we share the commitment in your Lordships’ report that no young person should be left behind.
Lord Shipley (LD)
My Lords, I thank the Minister very much for what she has said, and I should say that the government response to our report was extremely helpful. It defined what the issues were, which enables us to have a continuing debate on the conclusions and recommendations that the committee reached and on the Government’s actual actions to reflect what is happening outside Whitehall and Westminster.
As I have indicated, this has been a very helpful discussion and it has shown a broad unanimity of view on the issues. We will continue having this debate, because the country needs this debate. Let us look at the broad facts that we have debated tonight: 9% of young people are unemployed and there are 630,000 young people not in employment, education or training, yet there are 500,000 job vacancies in our country. As employers kept telling us, there is a huge skills mismatch, and they have great difficulty in recruiting the people they need at the levels at which they need them. So I conclude by saying that something has to change, and I hope it may be that this debate, our report and the government response will assist us in achieving the change that the country is actually asking for.